Economic Decision Making, Emotion, and Prefrontal Cortex

Introduction

Understanding and explaining human decision-making process is approached differently in economics and neuroscience. For instance, traditional economic theory explains behaviour primarily through theoretical foundations such as utility, preferences, and axioms. On the other side, neuroscience considers the physiological aspects and somatic variables that affect decision-making. In recent years, neuroeconomics has emerged as a multidisciplinary research area that integrates knowledge from neuroscience, psychology, and economics to better understand economic decision-making and to specify more accurate models of choice and decision. Multiple options always characterize decisional situations by multiple options, each carrying potential rewards, risks and related outcome probabilities.

Therefore, real life decision making requires the ability to make decisions effectively. The purpose of the chapter is to explain the relationship between economic decision making and emotion on one hand, and the relationship between economic decision making and prefrontal cortex on the other hand. In particular, based on a brief literature review, we aim to present the role of psychological factors, especially emotions, in economic decision making and presenting cortex regions involved in financial decision making. We essentially focus on physiological and neuroimaging aspects of economic and financial decision making. The chapter is organized as follows. Section 1 focuses on economic decision making and emotion. Section 2 covers economic decision making and the prefrontal cortex. Section 3 provides directions for future works as suggested in the literature. Section 3 presents the Conclusion.