The paper “ Key Assumptions of Neuroeconomics, Global Financial Crisis and Neuroeconomics” is an inspiring example of the literature review on macro & microeconomics. Neuroscience refers to the study of the brain with specific reference to behavior. Psychology is defined as the scientific study of the mind and the way people behave, while economics aims to study principles of the way money, business, and the industry is organized. The combination of the three phenomena neuroscience, psychology, and economics forms neuroeconomics. According to Camerer (2003), Neuroeconomics can therefore be referred as the aspect of using the brain to be able to solve complex economic issues and theories, which explains how much people save, why there are strikes are common among workers, it will therefore seek to explain several economics phenomena like why the prices of commodities are never constant, why some people save and how future market trends can be established among a number of issues. Gambling is one of the most common aspects that neuroeconomics seeks to study and achieve an explanation to a number of issues, that economics research has failed to explain in cognitive terms.
For example how people end up valuing the idea of winning and losing in a gambling game because there is always a possibility of either winning or losing. But after every win, the winner will always celebrate not knowing there is a part of the brain that will seek to explain this appropriately. Also, a region in the brain will be established for combining both the probability and hedonic sensations, therefore neuroeconomics would have proved much further what economics think is a simple model in gambling, and yet they cannot establish or explain it competently. The following figure show picture of two brains (adopted from google. com images on neuroeconomics): Powell Kendall states that the origin of neuroeconomics when researchers in both fields of neural science and economic identified that using tools in both fields might speed their work along.
This was because one field could very well be used to explain the other therefore raising harmony and support, especially for economics.
List of References
Ariely, D., Loewenstein, G. and Prelec, D., 2003.Coherent arbitrariness: stable demand Curves without Stable Preferences, Quarterly Journal of Economics, 118, p. 73–106.
Camerer, C. F., 2003.Behavioral Game Theory: Experiments on Strategic Interaction. Princeton University Press: Princeton.
Camerer, C., Loewenstein, G. and Prelec, D., 2004. Neuroeconomics: How neuroscience can Inform economics [pdf]. Available at :< http: //www.hss.caltech.ed u/!camerer/neurojel22f in al0504.pdf.> [Accessed 2 May 2012]
Gardner, E. L. and Lowinson, J., 1991.Marijuana’s interaction with brain reward systems: Update 1991. Pharmacology Biochemistry and Behavior, 40, p.571–580.
Glimcher, P., 2002. Decisions, Uncertainty and the brain: The science of neuroeconomics.MIT Press: Cambridge.
LeDoux, J. E., 1996.The emotional brain: The mysterious underpinnings of emotional Life. Simon & Schuster: New York.
National Research Council, 1999.Pathological Gambling, National Academy Press,Washington, DC.
Prelec, D. and Loewenstein, G., 1998.The Red and the Black: Mental Accounting of Savings and Debt, Marketing Science, 17,p. 4–28.