Post by Giulia Sperandio on Apr 17, 2016 23:23:21 GMT
The rationality in Economics may be misleading in different contexts, because humans are highly sociable creatures. We don't think in the margins all the time and we are not always rational, but I agree that we respond to incentives. An emerging branch of behavioral science that brings Economics and Neuroscience together to understand and predict decision-making in men is neuroeconomics. Studies in neuroeconomics try to understand people’s reasons for trusting one another, apparently irrational risk-taking, the valuation of long and short term benefit, altruistic or charitable behavior, and addiction.
One of the most important factors for economic advancement is trust among individuals. Comparing different countries, Paul Zak noticed that different countries have different trust levels and tied it directly to the environment they come from. He identified that the transaction cost is inversely proportional to generalized trust and three factors influence peoples' decision to trust one another which are: social environment, legal environment and economic environment. Social environment reflects how well the social norms are enforced. Legal environment reflects how well the rules are enforced for institutions and economic environment reflects the economic gap between individuals in a society. The more rules are followed and the smaller the economic gap, the more trusting people tend to be. Paul Zak also emphasized that trust leads to trust and that we can change trust by implementing policies such as education, press freedom and civil liberties, telephones and roads and income transfers.
As social creatures, we are “wired” to cooperate, and through the “Trust Game” Zak noticed that some deviant behavior was present: people not reciprocating even though they were really trusted. He then proceeded to search for a physiological factor that could be responsible for some of these unpredictable acts and he ran into Oxytocin (OT). Basically, when someone trusts us, the levels of this hormone get higher, making us bond with the person, which increases empathy and trust levels resulting in reciprocal behavior. It feels good to be trusted, but those who reciprocated were called the classic economic man and woman, who sought their best interest and were greedy. Why do you think those people reacted this way even though their OT levels went up, right after they were trusted? These people in a questionary previous to the game answered they were really trustworthy people, isn’t it confusing? Why do you think did happened?
Even though this is a deviant behavior, neuroeconomics will hopefully be able to predict when someone is more prone to giving back and what is the underlying reason behind this action, how amazing is that? Or what goes through the brain of people when we chose a product over the other.
To what extent do you think neuroeconomics can go? Do you believe this field can potentially increase the wealth of nations and make economics less reasonable and more psychologically based? What is something you would like to further know about neuroeconomics?
For those interested, I found an online course on Neuroeconomics (I will take it ahah, let me know if you want to do it too) and here is the link: www.coursera.org/learn/neuroeconomics/
One of the most important factors for economic advancement is trust among individuals. Comparing different countries, Paul Zak noticed that different countries have different trust levels and tied it directly to the environment they come from. He identified that the transaction cost is inversely proportional to generalized trust and three factors influence peoples' decision to trust one another which are: social environment, legal environment and economic environment. Social environment reflects how well the social norms are enforced. Legal environment reflects how well the rules are enforced for institutions and economic environment reflects the economic gap between individuals in a society. The more rules are followed and the smaller the economic gap, the more trusting people tend to be. Paul Zak also emphasized that trust leads to trust and that we can change trust by implementing policies such as education, press freedom and civil liberties, telephones and roads and income transfers.
As social creatures, we are “wired” to cooperate, and through the “Trust Game” Zak noticed that some deviant behavior was present: people not reciprocating even though they were really trusted. He then proceeded to search for a physiological factor that could be responsible for some of these unpredictable acts and he ran into Oxytocin (OT). Basically, when someone trusts us, the levels of this hormone get higher, making us bond with the person, which increases empathy and trust levels resulting in reciprocal behavior. It feels good to be trusted, but those who reciprocated were called the classic economic man and woman, who sought their best interest and were greedy. Why do you think those people reacted this way even though their OT levels went up, right after they were trusted? These people in a questionary previous to the game answered they were really trustworthy people, isn’t it confusing? Why do you think did happened?
Even though this is a deviant behavior, neuroeconomics will hopefully be able to predict when someone is more prone to giving back and what is the underlying reason behind this action, how amazing is that? Or what goes through the brain of people when we chose a product over the other.
To what extent do you think neuroeconomics can go? Do you believe this field can potentially increase the wealth of nations and make economics less reasonable and more psychologically based? What is something you would like to further know about neuroeconomics?
For those interested, I found an online course on Neuroeconomics (I will take it ahah, let me know if you want to do it too) and here is the link: www.coursera.org/learn/neuroeconomics/
