The economic brain
Featured Departments and Institutes
Combining biology, medicine, economics, psychology and engineering to increase understanding of basic brain processe
If the human brain is often compared with a computer, one aspect is crucially missing. The goals for information processing in computers are defined by humans, whereas the goals for biological brains are determined by the need for survival in uncertain and competitive environments. Individuals need to maximize the values of food, drink and sexual rewards. Biological brains have developed mechanisms through evolutionary selection that serve these goals. The same mechanisms appear also to be operational for more complex reward functions in the daily life of modern societies involving money, novelty, challenge, pride and many other attractive stimuli, events and constructs.
Neuroeconomics is an emerging field with a huge potential for understanding the basic brain processes that guide our daily decisions under uncertainty, emotion and social interactions
The step from food and fluid rewards to monetary rewards and financial investments has created a new field called neuroeconomics that combines economic decision-making, experimental psychology and neuroscience. The field has developed in the past five years out of the psychology and brain science related to reward and decision-making, and out of behavioural economics dealing with expected utility theory and games. Although behavioural economics has developed well over the past 30 years, there is hardly any knowledge on how the brain treats the underlying psychological processes.
Neuroeconomics is an emerging field with a huge potential for understanding the basic brain processes that guide our daily decisions under uncertainty, emotion and social interactions. This knowledge is crucial for understanding how these decisions go wrong in such pathological states as drug addiction, gambling, frontal brain lesions, schizophrenia and attention deficit hyperactivity disorder (ADHD). The research projects cut across such diverse disciplines as biology, medicine, economics, psychology and engineering.
In Experimental Psychology, emotions and economic behaviour are being investigated in the context of gambling tasks, using lesion studies to identify links between pre-frontal cortical lesion damage and decision-making impairments. This research is being complemented by fMRI studies of temporal discounting and impulsivity, identifying different neural correlates for early versus delayed rewards. Researchers in Physiology, Development & Neuroscience (PDN) are analysing, under real conditions, the steroid responses of male traders in the City of London, identifying a link between heightened testosterone levels and risky behaviour, and between cortisol levels and adverse memories of trading performance. Researchers in Economics and PDN are using fMRI to identify neurological responses to risk and reward in both humans and animals, and the effects of wealth and income on neural learning of financial rewards. They are also investigating herding and social pressure. Behavioural analyses have identified statistically significant associations between herding propensities and sociability during financial decision-making. Complementary fMRI studies are being used to identify the neural correlates of herding behaviour. Future collaborations with Experimental Psychology are planned, to extend these analyses of herding and social pressure into pharmacological studies and patients with brain injuries.