Neurology, Addiction and Psychiatry Conference

Neuroeconomics is that interdisciplinary field, incorporating insights from neuroscience, psychology, and economics, to research how the brain decides to move at what risks and rewards. In its mechanisms related to how the brain supports decision-making, neuroeconomics adds layers of understanding on why some choices are made, what people weigh risks and rewards against, and what drives their preferences and behaviors in the context of economies or social interactions. This emerging field shakes the classical beliefs concerning the functioning of humans or their minds in economic matters since biological knowledge is brought into the nature of thinking, feeling, and acting in a situation involving decision-making.

Neuroeconomics typically deals with the science study of how the brain processes information in determining the value of some options in relation to the rest as one selects or chooses. Those parts of the brain are activated that are engaged in the process of making some financial or social decision within the person. Techniques such as fMRI and EEG allow for observations of what regions are involved with rational thinking and planning, most interest in regions involved with reward processing - that is, the prefrontal cortex and the striatum. In essence, combining all these aspects of the brain helps people think of benefits and risks while determining choices that best serve their interest in the short run.

One of the critical aspects about neuroeconomics is appreciating how people experience and react to uncertainty and risk. The research has shown that the reaction of the brain to uncertainty can indeed nudge away from risk or proactively towards it, depending on the neurochemical mechanisms involved. Such changes would include neurotransmitter dopamine associated with the reward system and, hence, would significantly influence the balance between potential gains and losses. This insight carries tremendous weight for personal finance in that it explains why some will make irrational or emotionally driven choices-for example, over emphasizing immediately available rewards over and above long-term benefits.

The second concerns a critical focus on neuroeconomics: the emotional and cognitive biases of choice. At different junctures, such influences as feelings, social forces, and psychological considerations make people make choices that are less than optimal-choices that are counter to their own best interest. And thus, by pointing to the neural basis of such biases, neuroeconomics can at least point the way toward strategems that might yield improved decision-making processes to better financial, health, and social outcomes.

Neuroeconomics has practical applications in fields that may range from marketing and business to public policy or healthcare. The information on how the brain responds to other incentives can, for instance be put to use in devising programs that maximize better consumer behavior in a financial or health intervention leading towards better long-term well-being.

It is given as an opportunity with the advancement of neuroeconomics: a field that facilitates a way by bridging economic models and biological processes by combining the two into an advanced framework for understanding the human decision-making process.