3 Define neuroeconomics. Neuroeconomics is the study of the activity of the human brain when a person makes an economic decision. The discipline uses the observational tools and ideas of neuroscience to obtain a better understanding of economic decisions.

Neuroeconomics is an experimental discipline. In an experiment, a person makes an economic decision and the electrical or chemical activity of the person’s brain is observed and recorded using the same type of equipment that neurosurgeons use to diagnose brain disorders.

The observations provide information about which regions of the brain are active at different points in the process of making an economic decision.

Observations show that some economic decisions generate activity in the area of the brain (called the prefrontal cortex) where we store memories, analyse data and anticipate the consequences of our actions. If people make rational decisions, it is in this region of the brain that the decision occurs.