The researchers are undertaking experiments in which they measure reactions in the brains of individuals [WSJ] who must decide to distribute food to starving children equally, or allow some children to receive more food for the benefit of the entire community.
Of course, no children are actually affected by these experiments, but the subjects don’t know that.
To trigger the brain behavior, the 26 volunteers had to believe their decisions really would affect orphans being denied their seat at a groaning board of plenty where others feasted. So, the experimenters made them all study a 10-page brochure with pictures of 60 orphans. In 36 rounds of testing, each subject had 10 seconds to choose the lesser of two evils: Allow some children to keep more than their fair share of meals or take away their food to eliminate inequity.
I never really looked into the field of neuroeconomics before, but I’ve been finding it fascinating.
In the New York Times last year, an article focused on research to determine why investors do what they do. These researchers discovered that people are more likely to take a foolish financial risk when their brains are in a “positive arousal state.”
But when people think about costs, they use different brain modules and become more anxious. They play it too safe, at least in the laboratory. Furthermore, people are especially afraid of ambiguous risks with unknown odds. This may help explain why so many investors are reluctant to seek out foreign stock markets, even when they could diversify their portfolios at low cost.
Marketers must already understand this to an extent. People are more likely to buy a product when they are thinking about the potential benefits of the purchase and when their minds are immersend in positive thought. The costs, like fees, are in the fine print or otherwise hidden for view, and the hooks are set in large type and are shouted from the front of the seminar floor.
If you like research, here are several of the studies taking place at The Center for the Study of Neuroeconomics at George Mason University:
Call Auction Experiments. In a call auction participants indicate their willingness to buy or sell units of a good by placing an order to buy or sell some number of units at their buying or selling price…
How People Trade. We take the view that the ability to trade is an evolutionary adaptation to social environments. Using language, theory of mind, and reciprocity, people succeed in forming trading partners with little institutional support.
At the Stanford Neuroeconomics Lab:
* Neural basis of financial decision making
* Reward dynamics
* Neural basis of experienced reward
* Neuroeconomics of giving
For another interesting take on neuroeconomics, read Mind Games, an article from The New Yorker.
Image credit: Gaetan Lee
Updated June 20, 2014 and originally published October 12, 2007.