What Can We Learn from Neuroeconomics?

The foundations of contemporary economic theory lay in three basic intuitions: there is no free lunch, information is both costly and personal, economic agents make decisions trying to use at their best all the information available to them. The latter statement, in fact, comprises a long list of specific assumptions about human preferences/emotions/values, the way information is processed by human agents and the way in which decisions are arrived at. It takes little to realize that these, and many other things of which economists like to talk and theorize about, are all mental activities: “things” that happen in the brain, in other words. Until a few decades ago, and certainly at the time the foundations of contemporary economic science were laid, we had few, vague and mostly erroneous ideas about how the human brain works, how it processes external stimuli, how it stores information and how it makes its “rational” and “emotional” parts interact in the decision making process. Nowadays we seem to know a lot more and modern equipments allow us to “see” the brain at work, at least to a certain extent. It becomes then both practically relevant and intellectually challenging to re-examine the basic tenets of economic theory in the light of what neuroscientists have learned. This is what “neuro-economics” attempts to do through theoretical investigation, experiments and case studies. Have we learned something new or are things as murky and problematic as they were twenty years back?