Neuroeconomics: How the Brain Decides
Pepsi or Coke? Save or invest? Compete or cooperate? Study or stay in bed? We face decisions like these every day. This course shows us how our brain solves such dilemmas.
Name of minor:
Neuroeconomics: How the Brain Decides
Rotterdam School of Management, Erasmus University (RSM); Department of Marketing Management
Other programmes which are contributing to the minor:
The course consists of four modules. In Module 1: “How the Brain Works”, we discuss the history of neuroeconomics and provide a crash-course on the anatomy of the brain, as well as an introduction to neuroscience methods. Subsequently, we will investigate the balance between rationality and emotions, and provide a brief introduction into decision-theory form both a psychologist and an economist perspective in Module 2: “Perspectives on Decision-Making”. In Module 3: “How the Brain Decides”, students will be presented with the main theories and neuroscientific findings accounting for how the brain makes (optimal) economic choices. We will focus on the neural mechanisms of the computation of value and preference, and how the brain deals with risk and ambiguity. In addition, this module focuses on social aspects of decision-making: how group-membership and social interactions shape individuals’ decision-making. Finally, the practical applications of brain research in the fields of economics, marketing, business, and other aspects of society will be discussed in Module 5: “The Brain in Society”.
Neuroeconomics can provide social scientists and future managers with a deeper understanding of how they make their own decisions, and how others decide. How is a “good” or “fair” decision evaluated by the brain? What does our brain perceive as valuable? How do we learn the value of features of our environment? Is it possible to predict the purchasing intentions of a consumer? Are we hard-wired to be risk-averse or risk-taking?
The minor focuses on the interdisciplinary field of neuroeconomics - a new general theory of human behaviour building on psychology, economics and neuroscience. The goal of this minor is to understand the processes that underly decision-making by revealing the neurobiological mechanisms by which these decisions are made. The course focuses on neural mechanisms of choice; neural representation of subjective values; neurobiology of human irrationality; affective mechanisms of decision making; mechanisms of learning; social decision making; and applications of this knowledge in areas such as marketing and management.
Neuroscience allied to psychology, economics and management theory provides powerful models and advanced brain-research methods to explain how and why people make certain choices. Risky decision-making in financial markets, the role of emotions versus rationality, competition and cooperation in teams, consumer persuasion, are some of the central issues in this course in neuroeconomics. You will be provided with the most recent evidence from brain-imaging studies, and you will be introduced to the explanatory models behind them.
The course introduces an interdisciplinary perspective on economic choice behaviour. We are looking for students who want to understand decision making from a biological perspective; eager to learn more about how neuroscience can teach us about consumer and managerial behaviour. The course is relevant for students from business administration, economics, psychology and the social sciences in general.
All students that are interested in the neurobiological underpinning of choice behaviour are encouraged to participate; there are no requirements of specific background knowledge. However, a good command of the English language (both spoken and written) is recommended.
Maximum number of students that can participate in the minor: 42
Minimum number of students that can participate in the minor: 20
The course comprises 15 ECTS = 420 hrs.
Module 1: How the brain works
Module 2: Perspectives on Decision-Making
Module 3: How the brain decides
Module 4: The Brain in Society
Module 1: How the Brain Works (4 ECTS)
Content: The course will start with an introduction into the field by discussing the history of neuroeconomics, the anatomy of the brain, the role of genes and hormones, and the main brain imaging methods (such as fMRI and EEG).
Module 2: Perspectives on Decision-Making (3 ECTS)
Content: In this module, we will study the balance between rationality and emotions in the process of decision-making. As such, we provide a brief introduction in decision-theory form both a psychologist and an economist perspective.
Module 3: How the Brain Decides (5 ECTS)
Content: This module focuses on the core building blocks of neuroeconomics: decision theory and neuroscience. In a simple way, students will be presented with the main theories and findings accounting for how individuals learn the value of actions and outcomes, and use this information to make (optimal) economic choices. We will focus on the neural mechanisms of the computation of value and preference, and how the brain deals with risk and ambiguity. In addition, we will review current theories and scientific findings on social decision-making, focussing particularly on evaluations of fairness, cooperation, trust and empathy. Finally, we will investigate how decision-making changes across the lifespan.
Module 4: The Brain in Society (3 ECTS)
Content: In this last module, the influence of marketing actions on the consumer’s brain and behaviour will be discussed and practical applications of brain research in the fields of marketing and business will be shown. In addition, the moral and ethical dimensions of brain research will be discussed.
Teaching methods (all modules):
- Seminars and presentations of selected papers (team assignment)
- During a final class “Symposium” each team presents a research proposal of a Neuroeconomics topic (team assignment)
- Selected chapters from Gazzaniga (2009) Cognitive Neuroscience: The Biology of the Mind
- Selected chapters from Kahneman (2011) Thinking, Fast and Slow
- Selected chapters from other books & selected journal articles
Contact hours (all modules):
There will be about 54 contact hours (15 lectures and team supervison meetings.
Method of examination:
- Presentation of Class Paper + Questions – 20% of final mark
- - Two written exams (Modules 1, 2 and Modules 3 & 4) – together 50% of final mark
- - Research proposal with final presentation at the end of the course – 30% of final mark
The research proposal and the presentations are team assignments.
- The average grade of the two assignments and the written exam grade both need to be ≥4.5.
- When the grade of the assignments is not sufficient, an addendum can be submitted in order to enhance the grade. In addition, there is a re-sit of the written exam.
There will be feedback on the two assignments. The graded exams will be made available to the students for review.
Dr. Maarten Boksem
Phone: 024 – 366 8063