Neural antecedents of a random utility model

Abstract

For over a decade, economists have sought to identify neural antecedents for economic theories. More recently, neuroeconomic work has sought to predict consumer choice using brain activations witnessed in non-choice, visual appraisals. This paper combines these two emerging strains of inquiry. Using functional magnetic resonance imaging (fMRI) data observed when consumers view a quality-differentiated food product labeled with different attributes, we seek to determine the predictive validity of the random utility model (RUM) often used in economic studies of consumer choice. Our fMRI data consist of changes in blood flow to the ventromedial prefrontal cortex (a brain region previously associated with value formation) observed when people saw low price and high labels and labels indicating high or low quality. We couple the fMRI data with data on 28 non-hypothetical choices made by each participant, which pitted higher priced, higher quality good vs. a lower priced, lower quality good. We find little evidence of a systematic difference in activation in brain areas thought to be associated with value formation when viewing high vs. low levels of attributes (prices and quality). However, differences in neural blood flow across participants related to quality (but not price) is significantly related to subsequent consumer choice both in- and out-of-sample, providing some qualified neuroeconomic support for the attribute-based RUM.