ActInf GuestStream 113.1 ~ Bayesian Mechanics of Economic Choice (Ernesto Moya-Albor et al.)

"Bayesian Mechanics of Economic Choice: Computational Foundations of Economic Behavior"
Ernesto Moya-Albor, Sergio Samuel Montanez Jacquez, Luis Alberto Quezada-Téllez
https://www.researchgate.net/publication/391768845_Bayesian_Mechanics_of_Economic_Choice_Computational_Foundations_of_Economic_Behavior

This paper presents a theoretical unification of neuroeconomics with the Free Energy Principle (FEP) framework. We demonstrate that economic decision making can be formulated as a variational inference problem where agents minimize expected free energy, balancing risk (aligning predictions with preferences) and ambiguity (reducing uncertainty). Our formal analysis establishes mathematical equivalence between divisive normalization in neuroeconomic models and precision-weighted prediction error minimization in active inference. We show how Expected Subjective Value Theory (ESVT) from neuroeconomics naturally emerges from the FEP under Gaussian assumptions, explaining context-dependent valuation, reference-dependence, and risk attitudes through a common computational mechanism and generative model. This unification has significant implications for artificial intelligence, providing computational principles for developing more human-like decision-making agents that balance exploration and exploitation in an information-theoretic way. By bridging Bayesian mechanics with divisive normalization, we provide a neurobiologically plausible foundation for economic behavior that encompasses both classical utility maximization and information-theoretic approaches to decision-making under uncertainty. By integrating thermodynamic principles of information processing, we demonstrate how economic decision-making operates under physical constraints, offering a theoretical foundation for AI systems that must optimize computational resources while managing uncertainty.

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