Why Logic Often Takes A Backseat

Neuroeconomics, while still regarded skeptically by mainstream economists, could be the next big thing in the field. It promises to put economics on a firmer footing by describing people as they really are, not as some oversimplified mathematical model would have them be. Eventually it could help economists design incentives that gently guide people toward making decisions that are in their long-term best interests in everything from labor negotiations to diets to 401(k) plans. Says Harvard University economist David I. Laibson, another leading researcher: "To understand the real foundations of our behavior and our choices, we need to get inside the black box."