Vasily Klucharev

- Higher School of Economics

Neuroeconomics :
Neuroscience of decision making
Lecture N1
Introduction
Course Structure:
Module I: How the Brain works
Module II: How the Brain decides
Module III: How the Brain feels
Module IV: Society of Brains
What to expect/ dont expect from the
course:
Expect
Short introduction to Neuroeconomics
Limitations of Neuroeconomics
Trivial and nontrivial facts
Discussion of multidisciplinary paradigms
Difficult papers to read
Do not expect
A unified theory
Discussion of all aspects of Neuroeconomics
Easy to read handbooks
The Astonishing Hypothesis:
A person's mental
activities are entirely
due to the behavior of
nerve cells, glial cells,
and the atoms, ions,
and molecules that
make them up and
influence them.
Francis Crick (1916 2004)
Economics, psychology, and neuroscience
are converging today into a single, unified
discipline with the ultimate aim of providing
a single, general theory of human behavior -
neuroeconomics.
The goal of this discipline is to understand
the processes that connect sensation and
action by revealing the neurobiological
mechanisms by which decisions are made.
Adopted from Glimcher&Rustichini, Science 2004
Neuroeconomics perspective:
Neuroeconomics =
Neuroscience of
Decision making
Neuroscience the scientific
study of the nervous system,
a branch of biology.
gene
neuron
brain
cognition
society
biosphere
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Economics
&
Social Psychology
Cognitive psychology
Neuroscience
Cellular Neuroscience
Genetics
gene
neuron
brain
cognition
society
biosphere
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Neuro-Economics
economics social and cognitive
psychology
neuroscience
some assumptions
rationality
???
economics social and cognitive
psychology
neuroscience
some assumptions
rationality ???
???
cognitive structures
are real
Circular reasoning problem
In current psychological models the existence of
cognitive systems is postulated from observation
and analysis of behavior, which in turn is used to
explain behavior.
The only way to solve this dilemma was to use
tools or methods that enable researchers to
investigate behavior in a new, more objective
way - perhaps neuro-scientific.
economics social and cognitive
psychology
neuroscience
some assumptions
Rationality ???
Cognitive structures
are real
???
???
Actor's behavior is
determined solely by
actor's neurons
A 2 gram per 5 sec B 2 gram per 10 sec
gene
neuron
brain
cognition
society
biosphere
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Neuro-Economics
Behavioral economics
Daniel Kahneman
Nobel Prize in Economics in 2002
Experimental economics
Vernon Smith
Paul Glimcher
http://www.decisionsrus.com/
Core Neuroeconomics or Neuroscience of
decision making a field of neuroscience
that studies processes connecting sensation
and action by revealing the neurobiological
mechanisms by which decisions are made.
Extended Neuroeconomics a
multidisciplinary field that studies
mechanisms of decision making by
integrating the evolutionary, neurobiological
and social approaches.
Neuroeconomics
Motorlab, University of Pittsburgh
Brown UniversityOn April 12, 2011, nearly 15 years after she became paralyzed
and nable to spea!, a woman controlled a robotic arm by thin!in" abot movin"
her arm and hand to lift a bottle of coffee to her moth and ta!e a drin!#
The BrainGate2 Neural Interface System
An implanted microelectrode array, first sed more than a decade
a"o, detects brain si"nals which can be translated by a compter
into machine instrctions, allowin" control of robotic devices by
tho"ht#
The 52-year-old patient had been diagnosed with a degenerative brain and spinal
disease 13 years earlier and eventually became unable to move her arms and
legs. In February 2012, the researchers implanted two microelectrode arrays into
the woman's left motor cortex
University of Pittsburgh
NATURE|Vol 465|6 May|2010
What is decision theory?
Decision theory is a theory about decision making.
Do I see red or green color of the traffic
lights? depends on our sensory system.
Shall I bring the umbrella tomorrow?
depends on something which I do not know,
namely whether it will rain or not.
Am I going to smoke the next cigarette? If I
make the same decision sufficiently many times
it may kill me.
A committee has to make a decision, but its
members have different opinions. How to
overcome disagreements?
Sven Ove Hansson
1.There are options to choose between
Main assumptions:
2. We choose in a non-random way
3. Our choices are goal-directed activities.
vs
vs
Main assumptions
There are options to choose between
We choose in a non-random way
Our choices are goal-directed activities.
Overall, decision theory is concerned with goal-
directed behavior in the presence of options.
Normative and descriptive
theories
A normative decision theory a theory about
how decisions should be made
A descriptive theory a theory about how
decisions are actually made.
Sven Ove Hansson
Decision making
in Neuroeconomics
Ultimatum Game
Two anonymous players
1
st
player divides a sum of money
2
nd
player can accept or reject this proposal.
- If he/she rejects, neither player receives anything
- If he/she accepts, the money is split according to the proposal
Game is played only once, and anonymously - reciprocation is not an issue.
Sum =100$
Split = 95:5$
Decision?
and anterior cingulate
An unfair offer in the Ultimatum Game leads to conflict
between emotional, reject, and cognitive, accept, systems.
Sanfly et al 2003
Knoch et al 2006
DLPFC - dorsolateral prefrontal cortex
Evolutionary basis of inequity aversion
Cea1.com
Comparison of Nervous System and
Endocrine System
Posterior Pituitary Hormone Production and Release:
Oxytocin
Central projection
In humans, plasma levels of oxytocin have
been related to :
warm contact with a partner,
gaps in social relationships,
male and female sexual responses,
and trust and trustworthiness during
financial decisions!
Paul J. Zak is Professor of Economics
Kosfeld et al 2005
Kosfeld et al 2005
Oxytocin
Placebo
Genetic influence on our decisions and behavior
Years working as a trader correlates with DA levels as determined by COMT alleles
These alleles are associated with moderate, rather than very high or very low, levels of synaptic dopamine.
Sapra S, Beavin LE, Zak PJ (2012) A Combination of Dopamine Genes Predicts Success by Professional Wall Street Traders. PLoS
ONE 7(1): e30844. doi:10.1371/journal.pone.0030844
http://www.plosone.org/article/info:doi/10.1371/journal.pone.0030844
Genetics,
Biology
Psychology
Social sciences
Economics
Neuroscience
Neuroeconomics
Brain activations when participants purchased the
products vs. did not purchase the products
Knutson et al 2005
Benjamin Libet
(1916-2007)
University of California
Libet, Benjamin; Gleason, Curtis A.; Wright, Elwood W.; Pearl, Dennis K.
(1983). "Time of Conscious Intention to Act in Relation to Onset of Cerebral
Activity (Readiness-Potential) - The Unconscious Initiation of a Freely Voluntary
Act". Brain 106: 623642.
Dabarti CGI
http://www.informationphilosopher.com/freedom/libet_experiments.html
Chun Siong Soon et al 2008
"Your decisions are strongly prepared by brain activity.
By the time consciousness kicks in, most of the work
has already been done," said study co-author John-
Dylan Haynes
Figure 3. Decoding of upcoming motor decisions from frontopolar cortex.
Bode S, He AH, Soon CS, Trampel R, et al. (2011) Tracking the Unconscious Generation of Free Decisions Using UItra-High Field
fMRI. PLoS ONE 6(6): e21612. doi:10.1371/journal.pone.0021612
http://www.plosone.org/article/info:doi/10.1371/journal.pone.0021612
Martin Luther
(14831546)
Benedict de Spinoza
(1632 1677)
Immanuel Kant
(1724 1804)
men are deceived in thinking themselves free
So this - their not knowing any cause of their
actions - is their idea of freedom!
Benedict de Spinoza
Martin Luther
(14831546)
Benedict de Spinoza
(1632 1677 )
men are deceived in thinking themselves free
So this - their not knowing any cause of their
actions - is their idea of freedom!
Benedict de Spinoza
Visual system by
Felleman and Van Essen
(1991)
26% of all manipulated trials were caught by the subjects - choice
blindness.
Neuroscience of
Decision making
Eliminative materialism
our common-sense
conception of psychological
phenomena constitutes a
radically false theory, a theory
so fundamentally defective
that theory will eventually be
displaced, rather than
smoothly reduced, by
completed neuroscience.
gene
neuron
brain
cognition
society
biosphere
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Neuro-Economics
L.H.O.O.Q.
by Marcel Duchamp
readymades
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