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The Brain as a Hierarchical Organization

Isabelle Brocas () and Juan D. Carillo

No 06.48, IEPR Working Papers from Institute of Economic Policy Research (IEPR)

Abstract: We model the brain as a multi-agent organization. Based on recent neuroscience evidence, we assume that different systems of the brain have different time-horizons and different access to information. Introducing asymmetric information as a restriction on optimal choices generates endogenous constraints in decision-making. In this game played between brain systems, we show the optimality of a self-disciplining rule of the type “work more today if you want to consume more today” and discuss its behavioral implications for the distribution of consumption over the life-cycle. We also argue that our dual-system theory provides “micro-microfoundations” for discounting and offer testable implications that depart from traditional models with no conflict and exogenous discounting. Last, we analyze a variant in which the agent has salient incentives or biased motivations. The previous rule is then replaced by a simple, non-intrusive precept of the type “consume what you want, just don’t abuse”.

Pages: 37 pages
Date: 2006-04
New Economics Papers: this item is included in nep-cba, nep-cse, nep-evo and nep-hpe
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Related works:
Journal Article: The Brain as a Hierarchical Organization (2008) Downloads
Working Paper: The Brain as a Hierarchical Organization (2007) Downloads
Working Paper: The Brain as a Hierarchical Organization (2005) Downloads
Working Paper: The Brain as a Hierarchical Organization (2005) Downloads
Working Paper: The Brain as a Hierarchical Organization (2005) Downloads
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