My neuroeconomics column

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Not all of neuro-economics uses brain scans. Andrew W. Lo, a professor
at the Sloan School of Management at the Massachusetts Institute of
Technology, applied polygraph-like techniques to securities traders to
show that anxiety and fear affect market behavior. Measuring eye
movements, which is easy and cheap, helps the researcher ascertain what
is on a subject’s mind. Other researchers have opened up monkey skulls
to measure individual neurons; monkey neurons fire in proportion to the
amount and probability of rewards. But do most economists care? Are
phrases like "nucleus accumbens" – referring to a subcortical nucleus
of the brain associated with reward – welcome in a profession caught up
in interest rates and money supply? Skeptics question whether
neuro-economics explains real-world phenomena…

The next step? Perhaps neuro-economics should turn its attention to
political economy. Do people use the same part of their brains to vote
as to trade? Is voting governed by fear, disgust or perhaps the desire
to gain something new and exciting?


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