Featured Research

from universities, journals, and other organizations

Neuroeconomics: Studying brain responses gives marketers increased ability to predict how people make decisions

Date:
April 24, 2012
Source:
University of California, Berkeley Haas School of Business
Summary:
Magnetic resonance imaging (MRI) is typically used by medical professionals to visualize the internal structures of the human body. By using MRI to study the brain, researchers found a method to characterize how the different regions of the brain function in concert to enable people to anticipate and respond to competitors' behavior.

Magnetic resonance imaging (MRI) is typically used by medical professionals to visualize the internal structures of the human body. By using MRI to study the brain, Ming Hsu, assistant professor of marketing at the University of California, Berkeley's Haas School of Business, found a method to characterize how the different regions of the brain function in concert to enable people to anticipate and respond to competitors' behavior.

Related Articles


Hsu's ongoing work to understand how people behave and learn in these complex social and strategic settings is at the forefront of the emerging fields of neuroeconomics and neuromarketing, merging traditional economic models with new mental models of behavior.

In the paper, "Dissociable neural representations of reinforcement and belief prediction errors underlie strategic learning" (PNAS: Proceedings of the National Academy of Sciences, January 2012), Hsu and co-authors Lusha Zhu and Kyle Mathewson, both at the University of Illinois at Urbana-Champaign, studied how brains of participants responded to outcomes that were determined jointly by their own action and the actions of their opponents.

For example, imagine two companies engaged in a bidding war for oil. Strategic thinking requires that the companies must not only consider how much supply is available but anticipate how the competitor will bid. Hsu used economic models to look at how the brain uses the history of an opponent's action to build a mental model of what other participants in the market are doing to arrive at their behavior.

"We are able to observe how brain responses fluctuate over time dynamically in response to choices and contingencies that participants are faced with, " says Hsu. "That means we look not just at the static structure but at how of the brain responds over the course of decision making."

During scanning, participants were asked to play a multi-strategy, economic investment game. Two players were randomly matched at the beginning of each round and competed for a prize by selecting an investment. The player who invested the most wins won the prize but, regardless, both players lost the amount they invested. The goal of the investment game, therefore, was to invest one unit more than the opponent. Investing more than that merely wasted the extra units invested, and investing less resulted in losing the prize. Of course, the opponent was trying to do the same thing. By considering the opponent's beliefs and likely moves, the participants learned to maximize their financial reward. The researchers examined neural responses during the game to track how an opponent's change of behavior affects the other player.

The researchers focused on two types of learning processes. So-called "reinforced-based learning" (RL) operates through trial and error. In contrast, more sophisticated "belief-based learning" requires decision-makers to anticipate and respond to the actions of others. The researchers computed the areas of the brain where activity tracks these two types of learning. In addition, they discovered that the prefrontal cortex is an area that processes learning about other's' beliefs. The same area also predicts an individual's propensity to engage in either belief learning, or simply RL.

Hsu says that the same neural processes involved in this type of competitive strategic decisions are likely involved in other types of economic and consumer decisions. By studying decision-making processes in the brain, marketers may improve upon traditional surveys and market research methods to predict consumer behavior.

"We can use neuroscience as a supplement to standard research practices," says Hsu. "For example, in addition to conducting focus groups or surveys of consumers, we can one day look at neural responses of consumers and understand how their brains react to, for example, advertising campaign and promotions," says Hsu.


Story Source:

The above story is based on materials provided by University of California, Berkeley Haas School of Business. Note: Materials may be edited for content and length.


Journal Reference:

  1. L. Zhu, K. E. Mathewson, M. Hsu. Dissociable neural representations of reinforcement and belief prediction errors underlie strategic learning. Proceedings of the National Academy of Sciences, 2012; 109 (5): 1419 DOI: 10.1073/pnas.1116783109

Cite This Page:

University of California, Berkeley Haas School of Business. "Neuroeconomics: Studying brain responses gives marketers increased ability to predict how people make decisions." ScienceDaily. ScienceDaily, 24 April 2012. <www.sciencedaily.com/releases/2012/04/120424095506.htm>.
University of California, Berkeley Haas School of Business. (2012, April 24). Neuroeconomics: Studying brain responses gives marketers increased ability to predict how people make decisions. ScienceDaily. Retrieved December 20, 2014 from www.sciencedaily.com/releases/2012/04/120424095506.htm
University of California, Berkeley Haas School of Business. "Neuroeconomics: Studying brain responses gives marketers increased ability to predict how people make decisions." ScienceDaily. www.sciencedaily.com/releases/2012/04/120424095506.htm (accessed December 20, 2014).

Share This


More From ScienceDaily



More Mind & Brain News

Saturday, December 20, 2014

Featured Research

from universities, journals, and other organizations


Featured Videos

from AP, Reuters, AFP, and other news services

Researchers Test Colombian Village With High Alzheimer's Rates

Researchers Test Colombian Village With High Alzheimer's Rates

AFP (Dec. 19, 2014) In Yarumal, a village in N. Colombia, Alzheimer's has ravaged a disproportionately large number of families. A genetic "curse" that may pave the way for research on how to treat the disease that claims a new victim every four seconds. Duration: 02:42 Video provided by AFP
Powered by NewsLook.com
Double-Amputee Becomes First To Move Two Prosthetic Arms With His Mind

Double-Amputee Becomes First To Move Two Prosthetic Arms With His Mind

Buzz60 (Dec. 19, 2014) A double-amputee makes history by becoming the first person to wear and operate two prosthetic arms using only his mind. Jen Markham has the story. Video provided by Buzz60
Powered by NewsLook.com
Prenatal Exposure To Pollution Might Increase Autism Risk

Prenatal Exposure To Pollution Might Increase Autism Risk

Newsy (Dec. 18, 2014) Harvard researchers found children whose mothers were exposed to high pollution levels in the third trimester were twice as likely to develop autism. Video provided by Newsy
Powered by NewsLook.com
Yoga Could Be As Beneficial For The Heart As Walking, Biking

Yoga Could Be As Beneficial For The Heart As Walking, Biking

Newsy (Dec. 17, 2014) Yoga can help your weight, blood pressure, cholesterol and heart just as much as biking and walking does, a new study suggests. Video provided by Newsy
Powered by NewsLook.com

Search ScienceDaily

Number of stories in archives: 140,361

Find with keyword(s):
Enter a keyword or phrase to search ScienceDaily for related topics and research stories.

Save/Print:
Share:

Breaking News:

Strange & Offbeat Stories


Health & Medicine

Mind & Brain

Living & Well

In Other News

... from NewsDaily.com

Science News

Health News

Environment News

Technology News



Save/Print:
Share:

Free Subscriptions


Get the latest science news with ScienceDaily's free email newsletters, updated daily and weekly. Or view hourly updated newsfeeds in your RSS reader:

Get Social & Mobile


Keep up to date with the latest news from ScienceDaily via social networks and mobile apps:

Have Feedback?


Tell us what you think of ScienceDaily -- we welcome both positive and negative comments. Have any problems using the site? Questions?
Mobile: iPhone Android Web
Follow: Facebook Twitter Google+
Subscribe: RSS Feeds Email Newsletters
Latest Headlines Health & Medicine Mind & Brain Space & Time Matter & Energy Computers & Math Plants & Animals Earth & Climate Fossils & Ruins