Neuroeconomic Psychology: 3 Cognitive Training Modules for End-Users

Neuroeconomic Psychology: 3 Cognitive Training Modules for End-Users

Torben Larsen (University of Southern Denmark, Denmark)
Copyright: © 2019 |Pages: 17
DOI: 10.4018/IJPCH.2019010101

Abstract

A neuroeconomic decision-making model identifies risk-preference as the basal parameter of economic behavior. Other studies show that persons differentiated by weak, medium, and strong risk-preference have separate behavioral patterns. However, general personality psychology identifies five different personality types. A study of the relationship between risk-preference and personality type shows complementarity and strong correlation between risk-preference and extreme personality types “extravert” and “risk-averter.” The moderated personality types “open-minded,” “respective,” “agreeable,” or “conscientious” behave risk neutral with an internal order according to degree of flexibility. The integrated model of neuroeconomic psychology operates in three complementary cognitive tools: general skills to differentiate between the five types of economic agents is relevant for collaboration; the substance of the moderated personality types is the dual thinking process; and to handle stress the action-mechanism of classical mantra-meditation is explained as reinforcing open-mindedness.
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Introduction

The Scottish professor Adam Smith realized that new technical inventions as “Spinning Jenny” in the making of clothes and the “Steam Engine” to power machines in mines, factories and railways could revolutionize production options! For the Protestant Adam Smith, this inspired a vision of easing material conditions of life for ordinary people by technological progress, as already the case for well-of persons. 1776 Smith edited his vision in “Inquiry into the Nature and Causes of the Wealth of Nations”. David Ricardo advanced 1817 the principle of comparative advantage under free trade as key to economic growth for nations and since economists have claimed the rationality of economic agents as key to economic progress. The validity of the classical economic rationality-paradigm is today challenged from more angles:

  • Sociological studies conclude that economic agents are rather economic satisficers (Bounded Rationality) than optimizers in organizations to optimize careers instead of economics (Simon, 1958);

  • The economist Galbraith (1958) shows by studies of American consumer behaviors a 20% increase in consumer behavior by advertising compared to individual consumption without advertising. This is today explained by neuroeconomics as a power imitation - effect rooted in the Reptile brain (Erk et al., 2002) and far from classical economic utility considerations;

  • Psychologists claim the role of anxiety in economic decision-making especially in times of economic crisis. This criticism claims a broader fear-based loss aversion (Kahneman and Tversky, 1979);

  • Further, neuropsychology reveals a risk of over-imposed rationality due left Hemispheric dominance e.g. abstract reasoning in economics (Goel et al., 2006). A study of failures at the Top-level of US industrial management after World War II confirm how complacency did mislead management decisions (Galbraith, 1967).

A review of the criticism of paradigmatic economic rationality is Thaler (2008) who proposes “Nudging” as novel social relationship. Nudging is a libertarian paternalism where elbowing a kind way replaces simple emotional kindness to signal belief in rational decision-making. Beyond nudging a novel approach to behavioral economics, is presented as a review-based neuroeconomic model of decision-making (Larsen, 2017).

This study aims to operate the neuroeconomic model as a behavioral economic model based on general behavioral psychology (Goldberg, 1993).

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Materials And Method

Scientific databases are searched for taxonomies of healthy economic agents. Seven Studies are identified, hereof 2 Neuroeconomics, 2 Psychology, 2 Economics and 1 Sociology see Table 2. In-all four different branches of behavioral science find comparable taxonomies of economic agents.

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