Neuroeconomics, Neuromarketing & Neuroethics

Dr. Michael A. Davis

What is Neuroeconomics?
• Neuroeconomics is the use of information about brain activity, derived from neuroimaging tools and brain scans, to further understand the processes involved in economic decision-making. • Key: “where the brain chooses to look.”

Neuroimaging Tools
• Event-related Brain Potentials (ERP) • Functional Magnetic Resonance Imagery (fMRI) • Positron Emission Tomography (PET) • Magnetoencephalograms (MEG) • Single Photon Emission Computed Tomography (SPECT)

Research Focus
• Risk Preferences – aversion to uncertain rewards • Decisions Under Uncertainty • Brain States • Emotional States • Prior Experiences • Bottom Line: Economic decision-making is not rational

• 1,286 cancer deaths per 10,000 people is thought to be 32% riskier than 12.86%! • 78% chance of meeting financial goals overrides “22 out of 100 people with your strategy will end up eating cat food in the park.” • Buy one get one free is preferred over 50% off.

Brain Scans
• • • • • • Greed is Good, Gain is Mundane Expecting Dough vs. Expecting Dope Learning without Awareness I’m in Control Here The “Known Unknown” Don’t Go There From Your Money & Your Brain, Zweig

• • • • (George Mason) (CalTech) (Claremont) • • • Your Money & Your Brain, Jason Zweig

• “Neuromarketing is a new discipline which uses neuroimaging techniques to visualize the brain area activated by stimuli related with advertising, marketing and communication.” • “What this kind of research attempted to do is to get at the internal, subconscious states of mind, unadulterated by conscious deliberation.”

• “But if marketers could uncover what is going on in our brains that makes us choose one brand over another – what information passes through our brain’s filter and what information doesn’t – well that would be key to truly building brands of the future.” • Buyology: Truth and Lies About Why We Buy, Martin Lindstrom

Taste vs. Memory
• “A team of researchers studied the Coke-Pepsi paradox: during blind taste tests, the majority of testers preferred the taste of Pepsi, despite the fact that they buy more Coke. Functional MRI permitted demonstrating an astonishing fact: invoking the Coke trademark activates large areas of the brain, linked to memory, which shows that consumers are more influenced by their memory of the trademark than they are by the taste of the product.”

• POPI4 • a3YY • s.aspx

• • • • 317.asp • Buyology, Martin Lindstrom

• “Neuroethics encompasses a wide array of ethical issues…. These include ethical problems raised by advances in functional neuroimaging, brain implants, brain-machine interfaces and psychopharmacology as well as by our growing understanding of the neural bases of behavior, personality, consciousness, and states of spiritual transcendence.”

• iU0 • AXes

Legal Implications
• “The researchers found that activity in an analytic part of the brain, known as the right dorsolateral prefrontal cortex, tracked the decision of whether or not a person deserved to be punished but, intriguingly, appeared relatively insensitive to deciding how much to punish. By contrast, the activity in brain regions involved in processing emotions, such as the amygdala, tracked how much subjects decided to punish.” • • Brain is not fully matured until 25 years old.

• Techniques to “rewire” the brain.

• Be prepared to add “neuro” to the front of everything. • Raises Mind vs. Brain consciousness questions • Significant problems around manipulation and exploitation

• • • • • • • Neuroethics, Neil Levy

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