Reconciling the Formal and the Causal: The Role of the Neuroeconomy

Rational choice theory (RCT) is standardly interpreted not as a causal theory, but as a normative one. Experimental economics, by replacing underlying assumptions of the standard interpretation of RCT by more realistic ones – by including pro-social preferences to the utility function, for instance – has improved the predictability of the RCT. That was not sufficient, however, to overcome another theoretical difficulty that RCT faces, which is the fact that its postulated entities are not rooted in any causal mechanism. In this paper, we show how neuroeconomics, because it is not limited to behavioral manifestations, may pave the way to the development of a natural science of decision-making.

Behavioral Economics and Cognitive Data

One of the most impressive changes in economics and decision sciences is the emergence and rapid growth of so-called “behavioral” economics and neuroeconomics. These fields raise several methodological issues, some of which are at the forefront of current debate. Among those issues, the most prominent is: what is the epistemic relevance of non-behavioral or “cognitive” data, i.e., data which bear on cognitive processes and states involved in decision making? Faruk Gul and Wolfgang Pesendorfer (2005/2008) have vigorously criticized the idea that these data could be relevant for economics and decision sciences. Their criticisms became the focal point of a very active methodological literature. In this paper, we reconstruct and discuss Gul and Pesendorfer’s views and arguments. Although we are not convinced by some of them, we believe they suggest a genuine issue: the “missing links.”

Neuroscience and public policy: Toward a new economic interventionism?

Neuroscience is used in economics to improve the description and comprehension of individual choice behavior. It can also serve as a means of evaluating decision-makers’ rationality and regulating their behaviors. This paper analyzes the normative implications of neuroeconomics, i.e. the contributions of neuroscience to welfare economics and public economics. The economic interventions advocated by neuroeconomists (e.g. Bernheim and Rangel 2004) are interpreted as neoliberal politics in Michel Foucault’s sense (1978b). Neuroimaging techniques do not allow the “brain-manipulation” of decision-makers. They can detect pathological or irrational behaviors. This assessment calls for a behavioral regulation of welfare, which has to be distinguished from Sunstein and Thaler’s libertarian paternalism (Sunstein and Thaler 2003). The intervention targets the environment rather than the individual in both cases, but the theoretical justification is not the same. As for neuroeconomists, irrational behaviors such as addictions do not come from an individual’s cognitive bias but from an interaction with a pathological environment. The normative reflections in neuroeconomics continue the theoretical history proposed by Foucault in his works on biopolitics and neoliberalism (Foucault 2004b). Our analysis can thus be regarded as a contribution to studies on governmentality. It claims that there is a specific non-reductionist relationship between knowledge and power in Foucault’s thought.

At the foundation of altruism: The bond as finality

Behavioral economics sought to draw inspiration from research on empathy to modify the interactive model of homo economicus. However, it was faced with the impossibility of considering emotions, and emotional empathy in particular, within the framework of a theory of social preferences rooted in the rationality of the interactionist and individualistic model of game theory. This impossibility is due to the fact that game theory first, then behavioral economics, did not want to question the fundamental motives of the individual when he/she interacts with others. Yet the question of emotions, and emotional empathy in particular, should lead to questioning the sources of behavior. Indeed, what do the other behavioral sciences tell us? While the survival of the organism is undoubtedly a fundamental objective common to all living things, human beings derive their specificity from the fact that they also have fundamental and pre-wired mechanisms that specialize them for life in interaction with their fellows. It is thanks to these fundamental mechanisms that the human species has been able to develop productive and societal modes of cooperation on a large scale. We propose, therefore, a change of perspective in behavioral economics that would allow us to consider that the ultimate objective of the individual in society is not to ensure his/her survival and needs but rather to create and maintain their links with others.