Neuroeconomics and Confirmation Theory

Abstract

Neuroeconomics is a research program founded on the thesis that cognitive and neurobiological data constitute evidence for answering economic questions. I employ confirmation theory in order to reject arguments both for and against neuroeconomics. I also emphasize that some arguments for neuroeconomics will not convince the skeptics because these arguments make a contentious assumption: economics aims for predictions and deep explanations of choices in general. I then argue for neuroeconomics by appealing to a much more restrictive (and thereby skeptic-friendly) characterization of the aims of economics.

Triangulation across the lab, the scanner and the field: the case of social preferences

“…phenomena relevant to economic models. Our story is congruent with that of Clarke (2014) in that the relevant phenomena are more likely to be psychological than purely behavioural, and that independent variation in these variables is important. The possibility of introducing neural-level causal interventions to increase the kind of independence required in triangulation is a powerful argument in favour of these experiments, but this epistemic value should be strictly distinguished from a common intuition that neuroscientific experiments have evidential value purely by virtue of being neuroscientific.…”

Preferences and Positivist Methodology in Economics

“…(And one can easily modify the example to illustrate how the Terzian model could be tested by cognitive data and introspective data too.) This illustrates a general point: to treat the content of an economic model as purely about choices given external circumstances does not shield the model from being undermined by cognitive, neurobiological and introspective data, and so on-at least not completely shielded (Clarke 2014). In other words, the shorthand story does not issue in positivist doctrine (5), that the only evidence that bears on economic models is observations of agents' choices, and the external circumstances under which they make them.…”

On the neural substrates of the disposition effect and return performance

“…However, it has been warned that discontinuity tests on U.S. investor trades do not support sign realization preference, and show that it is not the source of the disposition effect (Hirshleifer, 2015;Ben-David and Hirshleifer, 2012). Moreover, Clarke (2014) criticizes the neurofinance approach of Frydman et al (2014) on methodological grounds by pointing to a simple modus tollens, disrupting their argument. Their first premise is that an economic model entails a specific cognitive hypothesis.…”

“…So, one must conclude that the content of the economic model is also false. However, because economic models of decision making do not entail specific cognitive hypotheses when they are construed appropriately, the first premise of the above argument is false (Clarke, 2014). Rather than aiming to prove or disprove alternative explanations of the disposition effect, here we only investigate whether it emerges in our neural data, regardless of the mechanism that generates it.…”