Revolutions usually involve a radical disruption to a system, provided by outsiders, as the insiders can no longer see their system objectively. In the early 1970s just such a revolution occurred when economics was rocked by two psychologists, Daniel Kahneman and Amos Tversky, whose experiments scientifically questioned the truth of economics’ classic assumption that people behave hyper rationally. This questioning became a revolution that now is an entire branch of scientific inquiry: behavioral economics. As in all scientific pursuits, theories were developed, predictions were made, and the status quo established.
Kahneman and Tversky described the human brain, and resultant behavior, as psychologists. Yet there is also a view of behavior that is oriented in matter and not in human choices; biologists believe that matter is the ground for all phenomena. So consciousness and behavior arise as an epiphenomenon. That is, behavior is the result of the highly complex inter-workings of physical componentry, such as physics, chemistry, and biology. Now some of these neuroscientists are launching an economics revolution of their own, neuroeconomics, that seeks to combine insights from psychology, economics, and biology into a single discipline that studies human choice.
Here is a curated list of leading neuroscience research, references, and articles:
- “Free Will from the Neuroscience Point of View“
- “Neural Random Utility and Measured Value“
- “Eight Lessons from Neuroeconomics for Money Managers“
- “Neuroeconomics: How Neuroscience Can Inform Economics“
- “Neurofinance: Bridging Psychology, Neurology, and Investor Behavior“
- “The Neuroscience Behind the Stock Market’s Reaction to Corporate Earnings News“
- Neuroeconomics (Studies in Neuroscience, Psychology and Behavioral Economics)
- Neuroeconomics, Judgment, and Decision Making
- Neuroeconomics: Decision Making and the Brain
- “High-Stakes Decision Making: How Neuroscience Rescues Behavioral Finance“
- “How Technology Can Help You Commit Fewer Investment Mistakes“
- “What the Lottery Has to Teach Us about Investing“
In this vein, two speakers at the 68th CFA Institute Annual Conference will be discussing the overlap between investment decision making, biology, and psychology in sessions on Sunday, 26 April. First, Roland Ullrich, CFA, will provide an introduction to neuroeconomics. Later, John Coates will deliver his keynote address on the biology of risk taking. Online registration for the event is closed, but you can follow social media highlights from the event and watch select conference presentations online.
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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.
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