Inductive modeling using causal studies in neuroeconomics: brains on drugs

Abstract

This paper introduces a new approach to economic analysis. We show how to move from deductive to inductive modeling and thereby reunite economics with approaches used in the natural sciences. This paper presents the empathy-generosity-punishment model as an example of research based on observation, experimentation, and the elimination of alternatives. Inductive modeling in neuroeconomics allows the identification of the physiologic mechanisms that produce behavior. Unlike most neuroeconomics studies, we show how to establish causation by using drugs to manipulate brain activity. This approach is demonstrated using three experiments that circumscribe the brain processes behind prosocial behavior.