New Economics Papers
on Neuroeconomics
Issue of 2007‒01‒14
three papers chosen by
Daniela Raeva

  1. Explaining the logic of pure preference in a neurodynamic structure By Dominique, C-Rene
  2. The role of fear in home-biased decision making: first insights from neuroeconomics By Kenning, Peter; Mohr, Peter; Erk, Susanne; Walter, Henrik; Plassmann, Hilke
  3. Interview with Kenneth Arrow By Dubra, Juan

  1. By: Dominique, C-Rene
    Abstract: This paper uses Category Theory to integrate a nonlinear, nonhomogeneous ordinary differential equation system into an input/output representation in an attempt to capture the mechanism behind the formation of pure preference in humans. The model shows that the human brain belongs to the class of functions U ε C2(R3, R). In addition, it shows that there exists an emerging factor, e, which is sine qua non for expressing a preference. The factor, e, may be associated with ‘judgement’ which, in turn, may neatly subsume ‘consciousness’, the arrival of new information, and cases of selection under risks and uncertainty.
    Keywords: Input/output; Dynamo; Universal Unfoldings; Emergent factor; Awareness; and Preference.
    JEL: B41 A1 A14
    Date: 2006–12–08
  2. By: Kenning, Peter; Mohr, Peter; Erk, Susanne; Walter, Henrik; Plassmann, Hilke
    Abstract: We used functional magnetic resonance imaging (“fMRI”) to investigate the neural mechanisms underlying home–biased, financial decision-making. Twenty-eight subjects were instructed to make binary investment decisions between a foreign and a domestic mutual fund. Differential brain activity was detected between decisions involving funds of different national origins. In situations where participants had to decide between mutual funds from different countries, we found increased activity in the precentral gyrus, the fusiform gyrus and the inferior occipital gyrus. Moreover, during home-biased decisions we found a correlation between activity within the amygdala- hippocampal regions of the brain and the investor’s general risk aversion. This region has been found to be involved in negative emotional processing such as fear, so one interpretation is that home-biased financial decision making is modulated by negative emotions associated with risk aversion.
    Keywords: Financial Decision-Making; Home-Bias; fMRI; Neuroeconomics
    JEL: F30 G00
    Date: 2006–08–01
  3. By: Dubra, Juan
    Abstract: Arrow argues that the biggest failures of economic theory are: our failure to explain the business cycle; the missing explanations for the size of fluctuations of prices; our failure to explain the causes of growth and of the spread of innovation. He then discusses several of the existing alternatives to the rational expectations paradigm. He tells the story of his dissertation, and how Koopmans wanted to decline his Nobel Prize.Finally, he discusses health care reform, and malaria in Africa.
    Keywords: Health Care; Business Cycles; Fluctuations.
    JEL: D00 D01 G12 E32 I0
    Date: 2005–03

This issue is ©2007 by Daniela Raeva. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.