Experimental islamic economics: A neurofinance experiment

Neurofinance is a multidisciplinary research field that aims to understand the reasons behind financial decisions through theories of neuroscience, finance, biology, and psychology. The Islamic finance is a research field that examines the concepts and institutions that Muslim individuals need in financial matters in terms of Islam and Islamic principles. The purpose of this study is to examine the role of religious belief in the financial decision-making process through the theory of neurofinance. Within this purpose, 12 volunteer participants who identified their religious affiliation as Islam were observed by means of fMRI (functional magnetic resonance imaging). Experimental rewards were offered without any financial penalties or risks. Before the experimental session begins, the participants were explicitly informed that if they accept the financial rewards, they will receive the financial rewards in cash as soon as the experiment is over and the spiritual responsibility of the financial reward belongs entirely to them in accordance with its religious status. The brain activations of the participants during the experiment were analyzed comparatively through the experimental MRI images in terms of their neurobiological activations during the periods when they saw and evaluated the rewards. The experimental rewards consisted of 20 cash financial rewards amounting to 1000 TL, 10 haram rewards amounting to 500 TL, and 10 halal rewards amounting to 500 TL, with no risk or financial penalty. According to the mainstream economics literature, participants were expected to accept all positive and risk-free financial rewards and to display a neurobiological reward reaction to these rewards. Participants refused to accept financial rewards defined as "haram" and showed significant neural activation in the right posterior insula region during the time they viewed haram rewards compared to the time they viewed halal rewards. They did not accept financial rewards that were religiously defined as "haram" even if they were financially positive and risk-free. When they visually perceived haram financial rewards, they exhibited right posterior insula activation, which is neurobiologically attributed to a displeasure response. The study is considered to be a landmark study in the literature in terms of the investigation of the interaction between religious motivation and financial decision making in the MR device.