Neural Predictors of Purchases
Abstract (Via Stanford)
Microeconomic theory maintains that purchases are driven by a combination of consumer preference and price. Using eventrelated fMRI, we investigated how people weigh these factors to make purchasing decisions. Consistent with neuroimaging evidence suggesting that distinct circuits anticipate gain and loss, product preference activated the nucleus accumbens (NAcc), while excessive prices activated the insula and deactivated the mesial prefrontal cortex (MPFC) prior to the purchase decision. Activity from each of these regions independently predicted immediately subsequent purchases above and beyond selfreport variables. These findings suggest that activation of distinct neural circuits related to anticipatory affect precedes and supports consumers’ purchasing decisions.
The decision of whether to purchase a product is the fundamental unit of economic analysis. From the bazaar to the Internet, people typically consider characteristics of available products, determine their cost, and then decide whether or not to purchase. The success of economic theory rests on its ability to characterize this repeated and elementary decision process. Neuroeconomic methods offer the hope of separating and characterizing distinct components of the purchase decision process in individual consumers.
In addition to being attracted to preferred products, consumers avoid prices that seem excessive. Many incentive schemes for promoting purchasing appear designed to diminish the salience of payments (e.g., credit
cards) or to create the illusion that products have no cost (e.g., frequent flyer mileage) (Prelec and Simester, 2001). To explain these phenomena, recent behavioral economic theories have postulated a hedonic competition between the immediate pleasure of acquisition and an equally immediate pain of paying (Prelec and Loewenstein, 1998). The notion that people consider prices as a potential loss can be contrasted with a different economic
Excerpted Conclusion (Via Stanford)
However, they additionally suggest that decisions to purchase may involve distinct dimensions related to anticipated
gain and loss rather than just a single dimension related to anticipated gain. These findings not only add to prior studies of product preference, but also link to studies of social decisions that implicate NAcc activation in the intention to cooperate (King-Casas et al., 2005; Rilling et al., 2002) and insula activation in the intention to defect (Sanfey et al., 2003). Thus, these findings further illustrate the power of the neuroeconomic approach to elucidate
distinct neuropsychological components that may exert consistent collective influences on subsequent purchasing decisions. They also suggest that even commonplace purchasing decisions can be deconstructed with methods adopted from psychology, economics, and neuroscience.