Abstract

Neuroeconomics focuses on brain imaging studies mapping neural responses to choice behaviour. Economic theory is concerned with choice behaviour but it is silent on neural activities. We present a game theoretic model in which players are endowed with an additional structure – a simple “nervous system” – and interact repeatedly in changing games. The nervous system constrains information processing functions and behavioural functions. By reinterpreting results from evolutionary game theory, we suggest that nervous systems can develop to “function well” in exogenously changing strategic environments. We present an example indicating that an analogous conclusion fails if players can influence endogenously their environment.