Neuroeconomic studies of impulsivity: Now or just as soon as possible?

A small group of scholars committed to the revealed preference approach have recently begun to propose that economics must search for additional observables that can be used to test and examine existing models. Andrew Caplin and Mark Dean (2007), for example, have proposed that the axiomatic reasoning that has characterized the study of revealed preference can be extended to the study of neurobiological variables that actually govern choice behavior. This seems to us an incredibly powerful new direction that could revolutionize both economics and neuroscience. Neurobiologists interested in the algorithmic structure of the brain have begun to reveal many of the proximal mechanisms by which choice is produced. Algorithmic mechanisms for preference ordering, stochastic choice, and even value construction have all been identified in recent years. Given these new observations, it seems only natural to ask whether these already existing observables can be used to examine, even falsify, existing revealed preference-based theories of choice. At the moment, neuroeconomists seem to be dividing into two camps. The first of these camps has used neurobiological data to argue against a revealed preference analyses of choice (Colin Camerer, Loewenstein, and Drazen Prelec 2005). Here, we argue for a different road. We believe that the revealed preference approach brings an unparalleled power to the study of choice. Contemporary neurobiology brings a similar power to the study of mechanism. It is the combination of these two tried and tested approaches that we believe can revolutionize both disciplines.