A common dynamic mechanism underlying value-based decision making
A fundamental goal in neuroeconomics is to draw on fundamental principles from neuroscience to inform
and constrain models of choice behavior. Here I will discuss a number of ways in which we've used such
principles to address both positive and normative concerns in economics. I will focus on a dynamic, "driftdiffusion model" of how choices are formed over time, and use that model to illustrate common principles
underlying both perceptual and economic choice. I will show that economic decisions are constrained by
subjects' imperfect knowledge of their own preferences, by their limited attention, and by their adaptation
to different ranges of values in their environment. With this model, I will demonstrate that choice behavior
is remarkably stable across different choice domains, such that, for example, aggregate behavior in
social-preference experiments can be predicted using parameters fit to a separate experiment on food
choice. The model also goes beyond the traditional economic approach as it is able to additionally
account for eye-movements, response times, and brain activity. Therefore, observing these additional
measures can improve choice prediction, in some cases making predictions where standard theory is
completely silent. From a more normative point of view, we find that people sub-optimally allocate their
valuable time in various constrained settings. In general, people spend too much time on choices for
which they are nearly indifferent. To help people overcome this inefficient allocation of time, we test a
simple intervention where subjects are simply cut off when their decisions take too long. We find that this
exogenous constraint on subjects' behavior actually improves their performance on the tasks, highlighting
the inefficiency of the unconstrained behavior. Finally, I will discuss the tension between drift-diffusion
and dual-process models of the relationship between response time and choice.