Thursday, February 09, 2006
Neuroeconomics In Real Estate
If you suspected all along that the orbitofrontal cortex of the limbic system in the frontal lobes of Buyers’ brains had something to do with their decisions to purchase real estate, you were absolutely correct.
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Silly me! And all this time when I wondered what is it that makes Buyers tick, I thought it was the hippocampus. Yes, I will give credit to all those who thought the orbitofrontal cortex of the limbic system in the frontal lobe of the brain is responsible for Buyers’ decision-making process. You were right. The other day when I went to the office and announced it aloud, half of the people went into a deep coma. Even Glen, the office manager, could not believe his own ears. Although, in all fairness to the faculty of perception of the human mind, it could be argued that Glen, afterall, is not human at all - but I digress.
Marketers already seem to know a lot about how we think, but recent experiments in neuroscience have captured the full attention of Corporate America and Corporate Japan. New scanning techniques are making it easier to determine how our minds work and creating hopes in the corporate world that companies can finally figure out how consumers are wired so as to create new connections with customers. And the field of real estate sales is at the forefront of this scientific research. The breakthrough behind all this is the development of functional magnetic resonance imaging or ‘fMRI’, the latest in neuroimaging technology, which displays not only the structures of the brain but also how they actually function by measuring blood flow. And the corporate world is particularly interested in how neuroimaging can be applied to study empathy, trust, deception, emotional communication, body language and generally speaking all issues that are central to human existence and interaction. Decision-making is, of course, at the top of the list.
The big question for Neuroeconomics is to discover how the human brains make decisions the likes of which house to buy or what to have for lunch. Research is showing that the limbic system, which governs emotions, often overrides the logical areas of the brain. This would suggest that contrary to what most of us believe, humans do not make rational decisions, at least not preeminently but, rather, their conclusions are rooted into deeper sources of motivation located well within the realm of sub-consciousness. And the corollary of all this, researchers seem to be suggesting, is that all those interested at aiming at consumers’ decision-making processes (such as myself) should really look beyond the mere sphere of logic and should perhaps try to appeal to the fuzzier side of how people feel about themselves, about others around them and about the corresponding environment. It is, afterall, a tenet of psychology that the outer world solely exists really in the perception of one’s own mind.
Even Hollywood is jumping into neuromarketing. In the Social Cognitive Neuroscience Laboratory at Caltech experiments are well under way to help studios select trailers for new movies by scanning viewers as they watch a series of scenes, so as to find out which scenes elicit the strongest reactions in the parts of the brain that are associated with reward expectations. And market-research laboratories in Tokyo are similarly scanning consumers to identify emotional reactions to houses, apartments, and city neighborhoods shown on large LCD wall-mounted monitors. Although there are some concerns that neuromarketers could use the new technology unwisely to peer into our brains and control our buying behavior, researchers are quick to point out that such fears are misplaced. They contend that science is merely trying to understand what goes on in human brains so as to ultimately help people understand themselves as well as each others better.
No matter the ramifications, it would certainly appear that Neuroeconomics is destined to help us better understand the cognition that occurs when we analyze our options and then choose one. As such Neuroeconomics, although a relatively recent approach to biology and human behavior, shows promise of contributing to knowledge in a wide range of areas , including such emotional fields as real estate sales.
Luigi Frascati
Real Estate Chronicle
