Neuroeconomic Studies in Industrial Organization: Brand, Advertising and Price Effects on Consumer Valuation and Choice

Abstract

Neuroeconomics makes use of new data and tools from neuroscience to enrich the study of economic decision-making. This chapter introduces neuroeconomic methods and surveys a number of contributions to the literature regarding brain responses to brands, advertisements, pricing and product characteristics. These contributions rely primarily on functional magnetic resonance imaging (fMRI) although electroencephalography (EEG) and other methods are also used. Industries represented in the survey include beverages (cola, wine, beer, coffee, and milkshakes); artwork; music; magazines; handbags; televisions; and sunscreen as well as anti-smoking advertisements. Some of these studies move beyond identification of brain regions associated with advertising, for example, to using brain activity to predict individual choices and even the behavior of the population at large.