Sunday, October 08, 2006

Neuroeconomics: A new look at decision making

Neuroeconomics uses the latest brain imaging technology to look at the brain to find out how people decide. The technique has been developed by Elizabeth Phelps, a professor of psychology and neural science at NYU and Colin Camerer, an economist at Caltech.

Plato's comparision of the human soul to a chariot pulled by the two horses of reason and emotion is now being put to test after being obssessed with doing things with 'reason' for so long.

Some experiments have been carried out by presenting people with alternatives that carry different degrees of risk. It turns out that given "an even chance of winning a hundred and fifty dollars or losing a hundred dollars, most refuse the gamble, even at the expense of gains."

Until recently, economists were only observing people from the outside. Now, by using magnetic resonance imaging they have begun to look inside the brain for fresh perspectives.

For more on this confusing business of nueroeconomics click here.

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