Jim Downing @ Smart Mobs
like a monkey driving a car

This article in Businessweek says that "the study of neuroeconomics may topple the notion of rational decision-making. According to the new science of neuroeconomics, the explanation might lie inside the brains of the negotiators. Not in the prefrontal cortex, where people rationally weigh pros and cons, but deep inside, where powerful emotions arise. Brain scans show that when people feel they're being treated unfairly, a small area called the anterior insula lights up, engendering the same disgust that people get from, say, smelling a skunk. That overwhelms the deliberations of the prefrontal cortex. With primitive brain functions so powerful, it's no wonder that economic transactions often go awry. "In some ways, modern economic life for humans is like a monkey driving a car," says Colin F. Camerer, an economist at California Institute of Technology".

Why Logic Often Takes A Backseat

I generally don't like the idea of trying to turn everything into economics. It often reminds me of trying to make music with math. This idea that we act irrationally is obvious to most people and if neurologists can help explain it to the economists, good. But I don't think it's just our economy that's being run by monkeys.

3 Comments

There is good economics and there is bad economics. The economics that presumes that people are rational is bad economics.
-russ

I usually say "we do pretty well, for a bunch of monkeys" ... which is the best sliver lining I can come up with.

BTW, if anyone hasn't read "The Winner's Curse" by Richard H. Thaler, I still think it is the best (readable) introduction to human economic behavior. And the good news (silver lining) is that many of our decisions are altruistic and humane rather than starkly economic.

most people running *anything* tend to be focussed, not on "prefrontal cortex", or long-term thinking, but rather on how to cover their asses in the short-term and maintain the positions they have somehow managed to attain.

some really egregious examples of current leaders in government and business come to mind, but i think i see it as more of a universal condition in the united states. i suppose, if it's neurological, then there is a fair amount of determinism involved, and that lets everyone off the hook.

that will not, however, keep me from bitching about people's shortsightedness.

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Insulting the Monkeys from Your Seat is also a Flotation Device
May 4, 2005 6:03 PM

Surely it's not whether we have strong (primal?) emotional responses to a given situation, it's what we learn to do with them? - Not unlike the Monkeys in the space program who learned it was in their interest not to give into their rage, but to pr...

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