Neuro-economics = the study of what a person's brain does while making decisions. They have studied the flow of oxygen which is linked with heightened neuro-activity. There are 3 main findings

i) the region that is commonly associated with emotional arousal is the amygdale. It accesses very rapidly the emotional stimulus

ii) anterior cingulated is associated with conflict and self-control. It is most active when people do unnatural things

iii) frontal lobe combines both emotions and reasoning to guide decisions

. People tend to prefer the sure thing over the gamble (they are risk averse) when the outcomes are good. On the other hand, they tend to reject the sure thing and accept the gamble (they are risk seeking) when both outcomes are negative.

Remember: theories can survive for a long time even after conclusive evidence proves them to be false; need to frame outcomes in positives, like gains, pleasure, enjoyment, etc and not negatives like losses, pain, etc; the location of the reference point is pivotal in framing outcomes

. Utility = wantability

. Peak-end rule = the average level of emotions, like pain, pleasure, etc is reported at its peak and when it ceases. For example, storytelling: it is often the ending that defines the story, narrative, etc

. Duration neglect = the duration of the procedure had no effect whatsoever on the rating of the total emotions, like pain, pleasure, happiness, anger, worry, tough etc. It is the less-is-more effect.

On the other hand, duration can be an issue like a mother in labour (becomes more exhausted as time goes on), length of vacation (the longer it lasts, the more refreshed a person is), etc

"...We intuitively assess such episodes in the progressive deterioration or improvement of the ongoing experience, and how the person feels at the end..."

Daniel Kahneman 2012


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