In our everyday choices we often deceive ourselves. Rather like Charlie Brown, with his bewilderment on meeting the “little red-haired girl”, our minds are often over-heated with emotion and befuddled. When we save, spend and invest, we are not the rational and lightning-fast calculators of ‘utility’ envisaged by the mathematical models of economists. We may be wrong-headed, but there is method in our stupidity. Our errors are pervasive, recurrent and predictable. They stem from a logic different from that of mathematics, but no less systematic, which follows mental (or heuristic) patterns investigated by numerous ingenious experiments. The result is a “gallery of economic errors (or horrors!)” explained by some sort of cognitive unconscious which filters reality and determines our reactions.
The hypothesis I am working on, supported by fMRI evidence, is that our decisions derive from ceaseless negotiation between automatic and controlled processes, between affect and cognition – or more banally between emotions and reason – and from the interplay among the synapses of the corresponding cerebral areas.