Connecting neuroscience to economics
Psychology and economics have successfully demonstrated that human behavior is not endlessly variable, but can be captured and quantified by testable laws. Modern neuroscience techniques can identify and link individual differences in decision-making behavior to differences in brain anatomy, brain responses, genetics, and so on. In particular, modern neuroimaging techniques provide the means by which human brain responses can be monitored while subjects are engaged in economic-based behavioral tasks. Our lab has been employing this methodology to study well-quantified group behavioral scenarios in which monetary outcomes vary depending on how people cooperate, compete, or punish others.
The goal of this work is centered on the idea of valuation, especially neural valuation. Valuation is a central concept in economics. In this domain, the value of goods must be put on a common scale in order to compare, contrast, and prioritize their value. In this context, the idea of a currency provides just such a common valuation scale.
Neural valuation and its connection to decision-making
Nervous systems are also equipped with rapid, online valuation systems. These valuation systems equip a mobile creature with a capacity to rank (prioritize) stimuli and internal states. Without valuation systems, a creature would be unable to assess the behavioral value of attending to some stimulus or carrying out some behavior. Rapid valuation is also intimately connected to decision-making mechanisms embedded in nervous systems. Creatures tend to make decisions that lead to more valuable outcomes. From this point of view, it is easy to see that pathologies of valuation will underlie a large number of behavioral abnormalities. These include drug addiction, various forms of mental illness, and even milder developmental behavioral disorders. For example, drug addicts have a serious problem with decision-making algorithms. Otherwise, why would an addict decide to sacrifice biological sustenance in order to put alcohol in their blood or cocaine in their nose? Some of the theoretical frameworks in economics are very useful in uncovering valuation and decision-making mechanisms in the human brain. This is the sense in which Neuroeconomics addresses important, but relatively untested issues related to neural function. Better understanding in this area has broad implications in many fields.
Montague, PR, King-Casas, B, Cohen, JD (2006) Imaging valuation models in human choice. Annual Review of Neuroscience 29:417-448. PDF
Montague, PR, Hyman, SE, Cohen, JD (2004) Computational roles for dopamine in behavioural control. Nature 431:760-767. PDF
Montague, PR, Berns, GS (2002) Neural Economics and the biological substrates of valuation. Neuron 36:265-284. PDF