Neuroeconomics appears to offer welfare economics an evidential supplement, since neural data may help distinguish choices that express genuine preferences from choices distorted by addiction, framing or self-control failure. This paper asks when such evidence can legitimately inform welfare judgements for policy. It develops a conceptual framework linking three levels of analysis, namely neural signals, computational decision models and normative welfare criteria. The central argument is that neural data can constrain welfare analysis only under four conditions, covering the validity of the neural measure, the identifiability of the decision model, the explicit statement of the welfare criterion, and the institutional context of any policy use. Applying this framework to addiction, neuromarketing and environmental policy, and working through the United Kingdom's Tobacco and Vapes Act 2026, a major intervention justified without any neural measurement, the paper develops a Neuroeconomic Welfare Inference Checklist for neural evidence. Neural data can improve behavioural welfare economics by clarifying the mechanisms behind choice, and they cannot replace normative argument about what counts as welfare. The same reasoning applies to artificial agents trained on human feedback, whose internal reward signals are computational quantities and not welfare measures.
This study proposes a General Bayes framework for policy learning. We consider decision problems in which a decision-maker chooses an action from a given set to maximize expected welfare. Typical examples include treatment choice and portfolio optimization. In such problems, the statistical target is a decision rule, and predicting each potential outcome is not necessarily of primary interest. We formulate this policy-learning problem through loss-based Bayesian updating. Our main technical device is a squared-loss surrogate for welfare maximization. We show that maximizing empirical welfare over a policy class with a quadratic penalty controlled by a tuning parameter ζ>0 is equivalent to minimizing a scaled squared error in the outcome difference. The resulting General Bayes posterior over decision rules admits two equivalent characterizations: a Gaussian pseudo-likelihood representation and a decision-theoretic loss-based characterization. As one implementation, we introduce GBPLNet, a neural network implementation with a tanh-squashed output. Finally, we establish PAC-Bayes-type guarantees for the surrogate risk and the corresponding penalized welfare.
Masahiro Kato
1Mizuho-DL Financial Technology Co., Ltd., Tokyo, Japan
We develop a flexible neural demand system for continuous budget allocation that estimates budget shares on the simplex by minimizing KL divergence. Shares are produced via a softmax of a state-dependent preference scorer and disciplined with regularity penalties (monotonicity, Slutsky symmetry) to support coherent comparative statics and welfare without imposing a parametric utility form. State dependence enters through a habit stock defined as an exponentially weighted moving average of past consumption. Simulations recover elasticities and welfare accurately and show sizable gains when habit formation is present. In our empirical application using Dominick's analgesics data, adding habit reduces out-of-sample error by c.33%, reshapes substitution patterns, and increases CV losses from a 10% ibuprofen price rise by about 15-16% relative to a static model. The code is available at https://github.com/martagrz/neural_demand_habit .
Neural networks increasingly guide decisions in high-stakes domains such as medical diagnosis, credit approval, and energy bidding. Audit in these settings requires case-level evidence: which training cases support an action and what outcomes they carried. Case-based decision theory (CBDT) formalizes this reasoning by aggregating outcome support from remembered cases. We show that an OLS action readout fitted on a fixed neural representation admits an exact case-based decomposition. Each action score is a weighted sum of training-case returns, with coefficients determined by empirical Gram geometry. We identify a sufficient regime for CBDT similarity semantics; outside it, the coefficients should generally be treated as signed Gram-geometric influence. The decomposition yields audit signals that trace scores to training cases, measure action coherence, and identify weak support. Across synthetic CBDT, PJM, Adult Income, and Default Credit tasks, the method recovers case-level preference structure and achieves the highest mean Top-30 consistency among compared attribution baselines, while remaining competitive on support reconstruction. The audit requires only fitting an OLS top-layer probe, without retraining the representation or accessing the original optimization trajectory; probe fidelity is measured by score reconstruction.
Manli Yan, Yuebin Lin, Yaowen Yu +1
Huazhong University of Science and Technology Wuhan, China