NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

NBER Working Papers by Colin Camerer

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Working Papers

August 2013Neural Activity Reveals Preferences Without Choices
with Alec Smith, B. Douglas Bernheim, Antonio Rangel: w19270
We investigate the feasibility of inferring the choices people would make (if given the opportunity) based on their neural responses to the pertinent prospects when they are not engaged in actual decision making. The ability to make such inferences is of potential value when choice data are unavailable, or limited in ways that render standard methods of estimating choice mappings problematic. We formulate prediction models relating choices to “non-choice” neural responses and use them to predict out-of-sample choices for new items and for new groups of individuals. The predictions are sufficiently accurate to establish the feasibility of our approach.
November 2012Using Neural Data to Test a Theory of Investor Behavior: An Application to Realization Utility
with Cary Frydman, Nicholas Barberis, Peter Bossaerts, Antonio Rangel: w18562
We use measures of neural activity provided by functional magnetic resonance imaging (fMRI) to test the "realization utility" theory of investor behavior, which posits that people derive utility directly from the act of realizing gains and losses. Subjects traded stocks in an experimental market while we measured their brain activity. We find that all subjects exhibit a strong disposition effect in their trading, even though it is suboptimal. Consistent with the realization utility explanation for this behavior, we find that activity in the ventromedial prefrontal cortex, an area known to encode the value of options during choices, correlates with the capital gains of potential trades; that the neural measures of realization utility correlate across subjects with their individual tendency ...

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