Section 3
Social Neuroeconomics
Ernst Fehr
"The emerging neuroeconomic approach rejects the premise of unobservability, and seeks a microfoundation of social and economic activity in neural circuitry,, using functional magnetic resonance imaging (fMRI), transcranial magnetic stimulation (TMS), pharmacological interventions and other techniques."
While the traditional economic approach generally assumes that people act in a self-interested manner, Ernst Fehr has uncovered a large amount of experimental evidence that would indicate many people act according to social preference. This means that their choices are based on positive or negative concern for the welfare of others and on what other players believe about them. Fehr's work focuses on an "economics of reciprocity" in which individuals will contribute to common goals that aren't necessarily beneficial to themselves when others are contributing. The foundation of social neuroeconomics is based on the fact that there are competing motives in making decisions rather than just self-interest. These competing motives not only include reciprocity, but altruism and inequity aversion as well.
The Future of Neuroeconomics
Valuable lessons can be taken from the field of neuroscience and implemented into economics. This is one of the core values of neuroeconomics. In neuroscience, before a finding can be accepted as "proved" they use many different measurement modalities, subject groups, These lessons can be illustrated through a neuroscience example done by Hill & Sally in 2003. In this study, they compared the behavior of healthy adults and children to that of autistic subjects of the same age. The study was designed to measure altruistic behavior. The study involved two participants with one receiving a monetary endowment having the choice to give away some amount to the second participant. Healthy adults typically offered 10% or less to the other participant. The report showed that autistics were no less likely to cooperate in giving away amounts of money, but they were not consistent in repeat play. This appeared to be from a lack of a mind for autistics because even young children were able to learn this. The conductors of the study indicated that this difference of behavior may occur because autistics have not developed the idea of "social fairness" that most healthy inviduals have learned through numerous social interactions.
Neuroeconomics Influence on Law and Policy
An important area that neuroecomonics can contribute to is the law. Laws specify the "rules" but not everyone follows these rules, even though their actions may result in harsh punishment. Neuroeconomics can help to answer questions such as "Why do some subjects still choose to do this? What drives such behavior? How much of it can be traced to nature and nurture?" A specific legal example would be property crime.
