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. 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 include altruism, reciprocity, or inequity aversion.