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on Neuroeconomics |
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Issue of 2012‒12‒06
four papers chosen by |
| By: | Cary Frydman; Nicholas Barberis; Colin Camerer; Peter Bossaerts; Antonio Rangel |
| Abstract: | We use measures of neural activity provided by functional magnetic resonance imaging (fMRI) to test the "realization utility" theory of investor behavior, which posits that people derive utility directly from the act of realizing gains and losses. Subjects traded stocks in an experimental market while we measured their brain activity. We find that all subjects exhibit a strong disposition effect in their trading, even though it is suboptimal. Consistent with the realization utility explanation for this behavior, we find that activity in the ventromedial prefrontal cortex, an area known to encode the value of options during choices, correlates with the capital gains of potential trades; that the neural measures of realization utility correlate across subjects with their individual tendency to exhibit a disposition effect; and that activity in the ventral striatum, an area known to encode information about changes in the present value of experienced utility, exhibits a positive response when subjects realize capital gains. These results provide support for the realization utility model and, more generally, demonstrate how neural data can be helpful in testing models of investor behavior. |
| JEL: | G11 |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18562&r=neu |
| By: | Booth, Alison L. (Australian National University); Katic, Pamela (Australian National University) |
| Abstract: | In this paper we utilise data from a unique new birth‐cohort study to see how the risk preferences of young people are affected by cognitive skills and gender. We find that cognitive ability (measured by the percentile ranking for university entrance at age 18) has no effect on risk preferences measured at age 20. This is in contrast to experimental studies that use IQ measures to proxy cognitive skills. However we do find that gender matters. While young women are significantly more likely than young men to assess themselves as being prepared to take risks, women choose to invest significantly less when they are confronted with a clearly specified investment decision based on hypothetical lottery winnings. This difference between the impact of gender on risk attitudes and the hypothetical lottery investment suggests that impatience and framing affect young women and men differently. |
| Keywords: | cognitive ability, risk preferences, risk attitudes, gender |
| JEL: | D01 D80 J16 J24 |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6997&r=neu |
| By: | Frieder R. Lang; David Weiss; Denis Gerstorf; Gert G. Wagner |
| Abstract: | Anticipating one’s future self is a unique human capacity that contributes importantly to adaptation and health throughout adulthood and old age. Using the adult lifespan sample of the national German Socio-Economic Panel (SOEP; N > 10,000, age range 18-96 years), we investigated age-differential stability, correlates, and outcomes of accuracy in anticipation of future life satisfaction across six subsequent 5-year time intervals. As expected, we observed few age differences in current life satisfaction, but stronger age differences in future expectations: Younger adults anticipated improved future life satisfaction, overestimating their actual life satisfaction 5 years later. By contrast, older adults were more pessimistic about the future, generally underestimating their actual life satisfaction after 5 years. Such age differences persisted above and beyond the effects of self-rated health and income. Survival analyses revealed that in later adulthood, underestimating one’s life satisfaction 5 years later was related to lower hazard ratios for disability (n = 735 became disabled) and mortality (n = 879 died) across 10 or more years, even after controlling for age, sex, education, income, and self-rated health. Findings suggest that older adults are more likely to underestimate their life satisfaction in the future, and that such underestimation was associated with positive health outcomes. |
| Keywords: | Subjective well-being, future anticipation, optimism, aging, health, mortality, disability, SOEP |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp502&r=neu |
| By: | Maria João Maia (IET, Universidade Nova de Lisboa, Faculdade de Ciências e Tecnologia) |
| Abstract: | WThis report aims to be the gathering of the main ideas that culminated in the presentation at the 1st Winter School of the PhD Programme on Technology Assessment (FCT-UNL) in December 2010. It is a guideline for future work development regarding Technology Assessment in Radiology, particularly having Magnetic Resonance Imaging, as an example. Therefore, as a background, it is necessary to understand what is “Technology Assessment”, how it developed and what it Europe’s interest in this area. Doing a transposition of this subject to health area, it is also important to understand the particularities of Health Technology Assessment. Portugal framework on this subject will also be addressed. As so, the Portuguese National Health System is characterized and the decision-making stakeholders identified, has well as the competences for the decision-making process in general. More generally, the different stakeholders perception involved in decision making, the mapping skills on technology assessment and decision making, the identification of indicators present in this decision making in Radiology, particularly in Magnetic Resonance area, are subjects to be addressed. To accomplish this, a research methodology was outlined, so that six research questions could be answered and five hypotheses could be accepted or refuted, in the future. With this research methodology, the Portuguese state of the art Magnetic Resonance equipment existence will be studied, using a survey as a resource. In the future, a mapping stakeholder technique will be used to identify the decision making key stakeholders and a survey will be applied to map theirs skills and competences in the process, where a pre-test was already applied. |
| Keywords: | Decision process, Health technology assessment, Magnetic Resonance, Radiology |
| JEL: | I18 M15 O33 |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:ieu:wpaper:40&r=neu |