Table: Inside The Black Box
New research lets economists link different kinds of behavior to particular areas of the brain -- and gives them a new tool for designing incentives that steer people to make better choices
WHY PEOPLE CAN BE SHORTSIGHTED
People use their rational prefrontal cortex to make decisions. But the prospect of immediate rewards or punishments activates the impatient limbic system of the animal brain, often leading to rash choices.
WHY PEOPLE CHANGE BEHAVIOR ABRUPTLY
The anterior cingulate takes "advice" from the rational prefrontal cortex and the limbic system, then picks which to follow. A small change in conditions can cause it to tip from one choice to the other.
WHY PEOPLE LOVE BONUSES
The striatum of the animal brain quickly gets used to new stimuli and reacts only to the unexpected, like a financial windfall.
WHY PEOPLE PUNISH CHEATERS
The anterior insula reacts strongly to perceived unfairness, which helps deter unfair behavior. But the same part of the brain may trigger overreactions such as road rage.
WHY MONEY IS ITS OWN REWARD
The nucleus accumbens responds to money much the way it reacts to sex or cocaine. In other words, money is valued for itself and not just for what it can buy.