Table of Contents

Neuroeconomics and the Firm

Neuroeconomics and the Firm

Edited by Angela A. Stanton, Mellani Day and Isabell M. Welpe

The ideal firm has been studied over several centuries, yet little is known about what makes one successful and another fail. This pioneering book brings together leading researchers investigating the concept of the firm from a neuroscientific perspective.

Chapter 10: An Economic and Neuroscientific Comparison of Strategic Decision-making

Theresa Michl and Stefan Taing

Subjects: business and management, entrepreneurship, strategic management, economics and finance, behavioural and experimental economics, economic psychology


10. An economic and neuroscientific comparison of strategic decisionmaking Theresa Michl and Stefan Taing1 INTRODUCTION Economic decision-making is traditionally based on the assumptions of the predominant existence of Homo economicus (Latin: economic human being). The framework of this theory is known as the Rational Choice Theory (RC Theory). It includes assumptions such as utility maximization, opportunism, bounded rationality, complete information and rational facts. Thus, everything that can be measured is integrated into the decisions of homo economicus, and the decision is rationally made. But the decision model of the homo economicus is subject to criticism by many economists as this agent’s decisions are supposed to be based on comprehensiveness and quantitative factors (Camerer et al., 2005). What is missing in this decision model are soft factors such as motivations and emotions as well as context and interdependencies between the factors of decision-making. The need to improve the decisive power of the homo economicus is reflected in the different derivates coming from various fields, for example, Homo sapiens, Homo sociologicus, Homo ludens, Homo reciprocans, Homo politicus, Homo religiousus, Homo europaeus and many more. Still even these derivatives are criticized as not being satisfyingly adequate and comprehensive for decision models. One basic reason for this is that behavioral models are harder to develop than traditional economic models; building models of rational, unemotional agents is easier than building models of quasi-rational emotional humans. Neuroeconomics is a newly recognized field of interest that aims to open the ‘black box’ of economic decision-making and might...

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