John Cassidy looks at neruoeconomics, in the New Yorker. Now if only Cosma Shalizi would tell us more about econophysics.

Acknowledging that people don’t always behave rationally was an important, if obvious, first step. Explaining why they don’t has proved much harder, and recently Camerer and other behavioral economists have turned to neuroscience for help. By the mid-nineteen-nineties, neuroscientists, using MRI machines and other advanced imaging techniques, had developed a basic understanding of the roles played by different parts of the brain in the performance of particular tasks, such as recognizing visual patterns, doing mental computations, and reacting to threats. In the mid-nineties, Antonio Damasio, a neurologist at the University of Iowa, and Joseph LeDoux, a neuroscientist at N.Y.U., each published a book for lay readers describing how the brain processes emotions. “We were reading the neuroscience, and it just seemed obvious that there were applications to economics, both in terms of ideas and methods,” said George Loewenstein, an economist and psychologist at Carnegie Mellon who read Damasio’s and LeDoux’s books. “The idea that you can look inside the brain and see what is happening is just so intensely exciting.”

In 1997, Loewenstein and Camerer hosted a two-day conference in Pittsburgh, at which a group of neuroscientists and psychologists gave presentations to about twenty economists, some of whom were inspired to do imaging studies of their own. In the past few years, dozens of papers on neuroeconomics have been published, and the field has attracted some of the most talented young economists, including David Laibson, a forty-year-old Harvard professor who is an expert in consumer behavior. “Natural science has moved ahead by studying progressively smaller units,” Laibson told me. “Physicists started out studying the stars, then they looked at objects, molecules, atoms, subatomic particles, and so on. My sense is that economics is going to follow the same path.