nep-neu New Economics Papers
on Neuroeconomics
Issue of 2011‒02‒26
three papers chosen by
Daniel Houser
George Mason University

  1. The Neuroeconomics of Learning and Information Processing; Applying Markov Decision Process By Chatterjee, Sidharta
  2. Personality Psychology and Economics By Almlund, Mathilde; Duckworth, Angela Lee; Heckman, James J.; Kautz, Tim
  3. Who Is (More) Rational? By Syngjoo Choi; Shachar Kariv; Wieland Müller; Dan Silverman

  1. By: Chatterjee, Sidharta
    Abstract: This paper deals with cognitive theories behind agent-based modeling of learning and information processing methodologies. Herein, I undertake a descriptive analysis of how human agents learn to select action and maximize their value function under reinforcement learning model. In doing so, I have considered the spatio-temporal environment under bounded rationality using Markov Decision process modeling to generalize patterns of agent behavior by analyzing the determinants of value functions, and of factors that modify policy- action-induced cognitive abilities. Since detecting patterns are central to the human cognitive skills, this paper aspires at uncovering the entanglements of complex contextual pattern identification by linking contexts with optimal decisions that agents undertake under hypercompetitive market pressure through learning which have however, implicative applications in a wide array of social and macroeconomic domains.
    Keywords: Cognitive theory, Reinforcement Learning, Markov Decision Process, Glia, Action potential, policy pattern, Neuroeconomics
    JEL: D81 C61 D87
    Date: 2011–02–14
    URL: http://d.repec.org/n?u=RePEc:pra:mprapa:28883&r=neu
  2. By: Almlund, Mathilde (University of Chicago); Duckworth, Angela Lee (University of Pennsylvania); Heckman, James J. (University of Chicago); Kautz, Tim (University of Chicago)
    Abstract: This paper explores the power of personality traits both as predictors and as causes of academic and economic success, health, and criminal activity. Measured personality is interpreted as a construct derived from an economic model of preferences, constraints, and information. Evidence is reviewed about the "situational specificity" of personality traits and preferences. An extreme version of the situationist view claims that there are no stable personality traits or preference parameters that persons carry across different situations. Those who hold this view claim that personality psychology has little relevance for economics. The biological and evolutionary origins of personality traits are explored. Personality measurement systems and relationships among the measures used by psychologists are examined. The predictive power of personality measures is compared with the predictive power of measures of cognition captured by IQ and achievement tests. For many outcomes, personality measures are just as predictive as cognitive measures, even after controlling for family background and cognition. Moreover, standard measures of cognition are heavily influenced by personality traits and incentives. Measured personality traits are positively correlated over the life cycle. However, they are not fixed and can be altered by experience and investment. Intervention studies, along with studies in biology and neuroscience, establish a causal basis for the observed effect of personality traits on economic and social outcomes. Personality traits are more malleable over the life cycle compared to cognition, which becomes highly rank stable around age 10. Interventions that change personality are promising avenues for addressing poverty and disadvantage.
    Keywords: personality, behavioral economics, cognitive traits, wages, economic success, human development, person-situation debate
    JEL: I2 J24
    Date: 2011–02
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp5500&r=neu
  3. By: Syngjoo Choi; Shachar Kariv; Wieland Müller; Dan Silverman
    Abstract: Revealed preference theory offers a criterion for decision-making quality: if decisions are high quality then there exists a utility function that the choices maximize. We conduct a large-scale field experiment that enables us to test subjects' choices for consistency with utility maximization and to combine the experimental data with a wide range of individual socioeconomic information for the subjects. There is considerable heterogeneity in subjects' consistency scores: high-income and high-education subjects display greater levels of consistency than low-income and low-education subjects, men are more consistent than women, and young subjects are more consistent than older subjects. We also find that consistency with utility maximization is strongly related to wealth: a standard deviation increase in the consistency score is associated with 15-19 percent more wealth. This result conditions on socioeconomic variables including current income, education, and family structure, and is little changed when we add controls for past income, risk tolerance and the results of a standard personality test used by psychologists.
    JEL: C93 D01 D12 D81
    Date: 2011–02
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:16791&r=neu

This nep-neu issue is ©2011 by Daniel Houser. 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.
General information on the NEP project can be found at http://nep.repec.org. For comments please write to the director of NEP, Marco Novarese at <director@nep.repec.org>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.