
Top: A definition of neuroeconomics from American mathematician, biophysicist, and neuroeconomics pioneer Read Montague’s computational psychiatry unit of Virginia Tech Carilion. [1] Right: Montague's 2012 TED talk on his neuroeconomics research.

In science, neuroeconomics is the study of the relationship between neurochemistry and neurochemicals (e.g. dopamine levels), neuroanatomy and economic decision making mechanisms, and behavioral changes related to the results of those decisions and choices, in respect to return on investment, expected reward, and timing prediction or timed expectation to reward.

Overview
In 1999, American neuroscientists Paul Glimcher and Michael Platt presented the results of a study in which they measured the nerve cell activity in the brains of monkeys, specifically the lateral intraparietal cortex, performing decision and reward tasks; the finding of which pointed toward the hypothesis that choice making activity, was correlated with levels of dopamine, and hence theoretically with economic utility. This line of reasoning was called at the time “neuro economics”.

In 2000, economists and neuro economics researchers met in Princeton for the first major “neuroeconomics”—a 2002 coined term—conference. American mathematician, biophysicist, and neuroeconomics pioneer Read Montague, in 2003 interview, recalled the skepticism of expressed by one of the economists attending the conference, who say no reason to believe that brain chemicals might have anything to do with economics, to which Montague replied: [2]

“That is just poppycock. If your brain doesn’t generate economic behavior, what kind of ghost horses do you believe in?”

In 2002, Montague and American behavior psychiatrist Gregory Berns published their “Neural Economics and the Biological Substrates of Valuation”, connecting economics and brain chemistry, the abstract of which is as follows: [3]

“A recent flurry of neuroimaging and decision-making experiments in humans, when combined with single-unit data from orbitofrontal cortex, suggests how neural responses in the orbitofrontal-striatal circuit may support the conversion of disparate types of future rewards into a kind of internal currency, that is, a common scale used to compare the valuation of future behavioral acts or stimuli. A general function of neural tissue is ongoing economic evaluation, a central function for any system that must operate with limited resources, that is, all mobile creatures. All mobile creatures run on batteries; they must continually acquire nutrients and expel wastes in order to reproduce and survive. Consequently, the way that mobile creatures value their internal states, sensory experience, and behavioral output influences directly how they will invest their time and energy. By economic evaluation, we refer to the problems that an individual nervous system faces when making rapid, moment-to-moment decisions possessing real costs and potential future payoffs (good and bad). A central feature of this problem is the need for an internal currency that can be used as a common scale to value diverse behavioral acts and sensory stimuli.”

Here, interestingly, we see Montague and Berns using the term "mobile creatures" (see: life terminology upgrades). The gist conclusion of their paper, as summarized by American science writer Tom Siegfried, is as follows: [4]

“The paper note various lines of evidence supporting the idea that a circuit of activity linking two parts of the brain—one at the front, behind the forehead, and another deep in the brain’s middle—helps govern choice making by producing more or less dopamine. Dopamine levels predict the likely reward associated with different choices, the evidence indicated. If a choice produces precisely the predicted reward, the dopamine cells maintain a constant level of activity. When pleasure exceeds expectations, the cells squirt out dopamine like crazy. If the reward disappoints, dopamine production is curtailed. This monitoring system also takes timing into account—if dinner is delayed, dopamine is diminished. When the anticipated rewards aren’t realized the dopamine monitoring system tells the brain to change its behavior.”

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References
1. Computational psychiatry unit (neuroeconomics) – Virginia Tech Clarion.
2. (a) Siegfried, Tom. (2006). A Beautiful Math: John Nash, Game Theory, and the Modern Quest for a Code of Nature (pgs. 97-99). National Academies Press.
(b) Read Montague (faculty) – Virginia Tech Carilion.
(c) Read Montague – Wikipedia.
(d) Montague, Read P. (2012). “What We’re Learning from 5,000 Brains”, TED talks, Jun.
3. Montague, P. Read and Berns, Gregory. (2002). “Neural Economics and the Biological Substrates of Valuation” (html), Neuron, 36(2):265-84.
4. Siegfried, Tom. (2006). A Beautiful Math: John Nash, Game Theory, and the Modern Quest for a Code of Nature (pgs. 100-101). National Academies Press.

External links
● Neuroeconomics – Wikipedia.