Abstract

The specific regions in the brain that are active when some behaviour is observed is a kind of information that may be interesting for neuroscientists, but how could it be fruitful for economic theory? The thesis defended in the essay is that the brain matters to prediction. By using the Ultimatum Game as a benchmark, it is argued that if the goal of a model of human behaviour is to yield good predictions about important classes of choices, then models that incorporate neurobiological variables may have some advantages over alternative models.The essay includes two parts. Part I first analyses the Ultimatum Game and illustrates some of its experimental results. Then, it evaluates in detail the merits and shortcomings of Cristina Bicchieri’s model based on social norms. It centres on the predictive power of the model, and articulates some challenges it faces. Part II begins with a review of some neurobiological findings which suggest a different approach to construct predictive models of human behaviour. Drawing upon these findings, it gives some reasons why the predictions of a neurobiologically‐informed model have some advantage over those of Bicchieri’s model. A critical discussion of the thesis against possible objections terminates the essay. The conclusion follows that one way in which the study of the neurobiological foundations of decision‐making might be fruitful for economic modelling is in enhancing the predictive quality of its models