Christian Schmidt

Neuro-Economics Publication date : March 25, 2010

What is neuro-economics? Does it herald an intellectual revolution that will give a new lease of life to economics?

This book aims to show how and why the early results of research in neuro-economics lead us to revise several key analytical concepts in microeconomics. The areas concerned are primarily those relating to individual decision-making, the representation and management of risk, and strategic choices.

The theory of microeconomics requires an analysis of decision-making: this seemingly obvious statement is difficult to contest. The classical approach tells us that, by making choices, consumers seek to maximise their preferences, just as producers, by theirs, seek to maximise profits or to attain other goals considered economically reasonable. The primary goal of economists is thus to realise a general model that is as independent as possible of the specific psychologies of the various agents. Neurobiology, on the contrary, takes into account the diversity of operations that intervene in decision-making, and in the complexity that characterises the relations between these operations. Antonio Damasio, for example, has underscored the specific role played by the emotions in reasoned — or even rational — decision-making. He regards decision-making as a multidimensional process, during which there is a synthesis of the results of various operations: observation, perception, selection of information, anticipation, simulation, the mobilisation of memories of similar, previously experienced situations, negotiation and consideration. These operations solicit different, if not always distinct, mental functions.

These issues are examined here in the light of two central questions: How do we make choices? How do we evaluate the risks our choices entail?

• A crucial, rapidly developing area of economics is examined objectively by Christian Schmidt, one of the best French specialists.

• The financial and economic crisis could lead us to seriously question the relevance of economics. Could there be a better reason to discover what the most innovative economists propose to help us understand the phenomena that influence our strategies and decisions?

Christian Schmidt is a professor at the University of Paris-IX-Dauphine.