Monday, June 25, 2007

Brain Activity and Economic Judgment?

Just attended the keynote talk of Tom Mitchel at ACL 2007 in Prague. He described how the brain reacts when seeing a word or a picture associated with different concepts. For example, there are different parts of the brain activated when seeing a hammer (the word or a picture) and different parts when seeing an apartment. There seem to be different parts of the brain that process different concepts, so there is evidence that the "meaning" of a word corresponds to the activation of particular neurons.

I am wondering if similar things happen when someone is trying to judge the economic value of something. How do people act when seeing a bargain compared to seeing something that they perceive as expensive? Is there a similar activation pattern in the brain?

Update (July 2): I was reading the latest issue of Scientific American and I found an answer to the question above. Apparently, there is a related paper published in the January 26th issue of Science with the title "The Neural Basis of Loss Aversion in Decision Making under Risk" that discusses which parts of the brain get activated when someone needs to make a decision that will result in a future gain or loss. Interesting paper to read.