The Brain as a Hierarchical Organization

Isabelle Brocas and Juan D. Carrillo

American Economic Review, 2008, vol. 98, issue 4, 1312-46

Abstract: Based on recent neuroscience evidence, we model the brain as a dual-system organization subject to three conflicts: asymmetric information, temporal horizon, and incentive salience. Under the first and second conflicts, we show that the uninformed system imposes a positive link between consumption and labor at every period. Furthermore, decreasing impatience endogenously emerges as a consequence of these two conflicts. Under the first and third conflicts, it becomes optimal to set a consumption cap. Finally, we discuss the behavioral implications of these rules for choice bracketing and expense tracking, and for consumption over the life cycle. (JEL D11, D74, D82, D87, D91)

JEL-codes: D11 D74 D82 D87 D91 (search for similar items in EconPapers)
Date: 2008
Note: DOI: 10.1257/aer.98.4.1312
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Citations: View citations in EconPapers (80)

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Related works:
Working Paper: The Brain as a Hierarchical Organization (2007)
Working Paper: The Brain as a Hierarchical Organization (2006)
Working Paper: The Brain as a Hierarchical Organization (2005)
Working Paper: The Brain as a Hierarchical Organization (2005)
Working Paper: The Brain as a Hierarchical Organization (2005)
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