Neuromarketing and neuroeconomics
When producers market their goods they want to predict how much demand there will be. For economists, individual demand has always been a function of prices and income that can be derived from constrained utility maximization. One can add on to this basic model the knowledge state of the consumer which includes the idea that tastes may change with experience. However, we tend to ignore the actual mechanics of taste, something a marketing executive cannot do. A recent New York Times article describes some of the basic research being done in neuromarketing. My read is that scientists will be teaming up with marketing departments to understand how the brain actually forms ‘demand.’ While the first step is to look for reward processing in the brain, it is not the last step since demand itself is an emergent mental construct involving cognition, emotion, and motivation. Read Montague’s experiments with Pepsi and Coca-Cola reported in the Times article make this clear.
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