John Tierney on Neuroeconomics

From the New York Times:

Even the most rational economists, though, realize that the shopper’s mind is more complicated. The brain’s “impartial spectator,” as Adam Smith warned, has to duel with “the passions.” Last year, after surveying shoppers’ passions, behavioral economists at Carnegie Mellon University developed what they call the Tightwad-Spendthrift scale.
But this kind of survey reveals only what shoppers choose to confess. To find out more, the economists teamed with psychologists at Stanford to turn an M.R.I. machine into a shopping mall. They gave each experimental subject $40 in cash and offered the chance to buy dozens of gadgets, appliances, books, DVDs and assorted tchotchkes. Lying inside the scanner, first you’d see a picture of a product. Next you’d see its price, which was about 75 percent below retail. Then you’d choose whether or not you’d like a chance to buy it. Afterward, the researchers randomly chose a couple of items from their mall, and if you had said yes to either one, you bought it; otherwise you went home with the cash.
The good news, for behavioral science, was that the researchers saw telltale patterns, which they report in the Jan. 4 issue of the journal Neuron. “We were frankly shocked at how clear the results were,” said Brian Knutson, the Stanford psychologist who led the experiment. “It was amazing to be able to see brain activity seconds before a decision and predict whether the person would buy it or not.”

Posted by on January 20th, 2007 at 6:42 am


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