Lecture Notes: Neuroscience and Behavioral Economics

Key Concepts

Behavioral Economics: Integrates psychology and social sciences to make economics more reflective of human behavior.
Neuroeconomics: Examines brain activity during economic decision-making.

Occurs when individuals overstate their intentions in surveys without real consequences.
Example: Discrepancy in reported voting behavior versus actual voting.
Marketing implications: Many new products fail due to inaccurate market testing based on hypothetical biases.

Challenges in quantifying and adjusting hypothetical bias to reflect real behavior.
Research involves identifying brain signatures predictive of false affirmative responses ("Yes") that don't translate into action.

Brain Imaging Studies
- Participants were shown images of goods and asked if they would buy them at specific prices.
- Follow-up with actual purchase decisions after brain scanning to study neural patterns.
- Specific brain activity correlated with stated intent versus actual purchasing action.
Eye Tracking and Mouse Tracking
- Eye Tracking: Measures gaze duration and pupil dilation as indicators of interest or arousal.
- Mouse Tracking: Movement speed and trajectory correlate with valuation and decision certainty.
- Both methods provided insights into actual versus stated purchase intentions.

Smart Vending Machines: Used to study habits and the impact of small price changes.
- Features a programmable display to test consumer reactions.
- Potential for using cameras to track consumer focus, particularly on price awareness.

The current era is a 'golden age' for social sciences due to diverse measurement technologies.
Continued research aims to better understand decision-making processes and refine economic models.