In short, the use of neuroscience techniques and technologies in an economic study is known as neuroeconomics. The field of neuroeconomics aims to unite economics, psychology, and neuroscience. Advanced imaging techniques and biochemical testing are used in neuroeconomics to examine brain activity before, during, and after making economic decisions.
Neuroeconomics is not neuromarketing (a field I am very interested in exploring deeper with you guys in the future), but a field of neuroscience that shares interests with microeconomics, as well as behavioural economics. Yes, it’s all about choice-making.
In economics, people tend to make predictions about people’s choices (often between two options). Behavioural economics has revolutionised this part of economics by introducing the idea that humans are not as rational as economists thought they were. Neuroeconomics can here help to understand and produce theories on how choices can be read and predicted with neural data. That is signals from the brain.
But two problems remain. First, do we need to know what goes on in the brain? And second, where neuroeconomics managed to get to so far.
At its inception, neuroeconomics promised to revolutionize economics. That promise has not yet
been realized, and neuroeconomics has seen limited penetration into mainstream economics.
Nevertheless, it would be a mistake to declare that neuroeconomics has failed. --Konovalov.
We must not think that all is lost for the field, or that it has no uses. With neuroeconomics growing as a discipline, researchers have started to focus more on understanding computations from specific regions of the brain, as well as predicting behaviour from brain activity.
Indeed, this predictive function would be of use for both commercial companies and governmental entities.
For instance, asset booms and the ensuing financial crises have a history of recurring. The study of neuroeconomics sheds light on why people might not act in ways that maximise utility and prevent monetary hardship. Emotions frequently have a significant impact on people's decision-making. The brain frequently responds to losses more strongly than to benefits, which can lead to irrational behaviour. Though they are not necessarily undesirable, emotional reactions are rarely in line with the idea of reason. The study of neuroeconomics has the potential to advance our comprehension of the factors impacting decision-making as it develops.
Rephrased from Investopedia:
Other uses of neuroeconomics have included comprehending choices across time, making choices based on social perceptions, and making judgments that are primarily uncertain or risky.
People place various values on economic products at different points in time, and decisions made at one moment affect the options available to others. The goal of neuroeconomic research in this field is to comprehend how brain chemistry and activity may affect impulsivity and time preferences.
The mathematical models of conflict and cooperation amongst logical, intelligent decision-makers are applied in game theory. The relationship between trust, fairness, and reciprocity in social decisions and brain function has been the subject of neuroeconomic studies on social choice.
Neuroeconomics examines how decision-making processes in the brain and nervous system are mirrored in terms of risk preference, aversion to risk and loss, and incomplete information.
However, according to them (Investopedia), neuroimaging has done more for economics than psychology. But, how can that be, when the whole field of neuroeconomics is based on psychological concepts and theories?
Also, most of the findings in neuroeconomics are still based on individuals. Not much is yet known about neural processes of decision-making outside of the one. None for social groups, none for the teams, and so goes for organizations.