infonet-economy

In this chapter, we describe how risk and ambiguity impact the value of choice options, how this impact can be modelled formally and how it is implemented in the brain. In particular, we give an overview of two distinct ways of how risky choice options can be decomposed – either into outcomes and probabilities as proposed in economics or into statistical moments of the probability...

The growth of neuroeconomics as an academic discipline has been inextricably tied to the development of research methods to study brain function and its relationship to behavior. The aim of this chapter is to give an overview of these methods at a cursory level, while at the same time referring the reader to excellent textbooks and primary research articles for more in-depth...

A large body of evidence has implicated the posterior parietal and orbitofrontal cortex in the processing of value. However, value correlates perfectly with salience when appetitive stimuli are investigated in isolation. Accordingly, considerable uncertainty has remained about the precise nature of the previously identified signals. In particular, recent evidence suggests that...

Background: Graph-based analysis of fMRI data has recently emerged as a promising approach to study brain networks. Based on the assessment of synchronous fMRI activity at separate brain sites, functional connectivity graphs are constructed and analyzed using graph-theoretical concepts. Most previous studies investigated region-level graphs, which are computationally inexpensive, but...

Organisms make two types of decisions on a regular basis. Perceptual decisions are determined by objective states of the world (e.g., melons are bigger than apples), whereas value-based decisions are determined by subjective preferences (e.g., I prefer apples to melons). Theoretical accounts suggest that both types of choice involve neural computations accumulating evidence for the...

We construct an extensive form game that captures competitive markets with adverse selection. It allows firms to offer any finite set of contracts, so that cross-subsidization is not ruled out. Moreover, firms can withdraw from the market after initial contract offers have been observed. We show that a subgame perfect equilibrium always exists. In fact, when withdrawal is costless,...

An increasingly influential "technological-discontinuity" paradigm suggests that IT-induced technological changes are rapidly raising productivity while making workers redundant. This paper explores the evidence for this view among the IT-using US manufacturing industries. There is some limited support for more rapid productivity growth in IT-intensive industries depending...

There is a significant inflection in risk taking and criminal behavior during adolescence, but the basis for this increase remains largely unknown. An increased sensitivity to rewards has been suggested to explain these behaviors, yet juvenile offences often occur in emotionally charged situations of negative valence. How behavior is altered by changes in negative emotional processes...

The owners of small noncorporate businesses face substantial and largely uninsurable entrepreneurial risk. They are also an important group of stock owners. This paper explores the role of entrepreneurial risk in explaining time variation in expected U.S. stock returns in the period 1952–2010. It proposes an entrepreneurial distress factor that is based on a cointegrating...