Kevin McCabe | George Mason University (original) (raw)

Papers by Kevin McCabe


European Journal of Political Economy, 1989

Proceedings of The National Academy of Sciences, 2000

By around the age of 4 years, children ''can work out what people might know, think or believe'' ... more By around the age of 4 years, children ''can work out what people might know, think or believe'' based on what they say or do. This is called ''mindreading,'' which builds upon the human ability to infer the intentions of others. Game theory makes a strong assumption about what individual A can expect about B's intentions and vice versa, viz. that each is a self-interested opponent of the other and will reliably analyze games by using such basic principles as dominance and backward induction, and behave as if the normal form of an extensive form game is equivalent to the latter. But the extensive form allows intentions to be detected from actual sequential play and is therefore not necessarily equivalent psychologically to the normal form. We discuss Baron-Cohen's theory of the mindreading system [Baron-Cohen, S. (1995) Mindblindness: An Essay on Autism and Theory of Mind (MIT Press, Cambridge, MA)] to motivate the comparison of behavior in an extensive form game with its corresponding normal form. As in the work of Rapoport [Rapoport, A. (1997) Int. J. Game Theory 26, 113-136] and Schotter et al. [Schotter, A., Wiegelt, K. & Wilson, C. (1994) Games Econ. , we find consistent differences in behavior between the normal and extensive forms. In particular, we observe attempts to cooperate, and in some treatments we observe the achievement of cooperation, occurring more frequently in the extensive form. Cooperation in this context requires reciprocity, which is more difficult to achieve by means of intentionality detection in the normal as opposed to the extensive form games we study.

Personality and Social Psychology Bulletin, 2001

Allowing players in public goods games to make small incremen-tal commitments to contributing to ... more Allowing players in public goods games to make small incremen-tal commitments to contributing to the good might facilitate cooperation because it helps to prevent players from being “free ridden,” contributing more to the public good than other group members. Two ...

Proceedings of The National Academy of Sciences, 2001

Cooperation between individuals requires the ability to infer each other's mental states to form ... more Cooperation between individuals requires the ability to infer each other's mental states to form shared expectations over mutual gains and make cooperative choices that realize these gains. From evidence that the ability for mental state attribution involves the use of prefrontal cortex, we hypothesize that this area is involved in integrating theory-of-mind processing with cooperative actions. We report data from a functional MRI experiment designed to test this hypothesis. Subjects in a scanner played standard two-person ''trust and reciprocity'' games with both human and computer counterparts for cash rewards. Behavioral data shows that seven subjects consistently attempted cooperation with their human counterpart. Within this group prefrontal regions are more active when subjects are playing a human than when they are playing a computer following a fixed (and known) probabilistic strategy. Within the group of five noncooperators, there are no significant differences in prefrontal activation between computer and human conditions.

Proceedings of The National Academy of Sciences, 2007

Reinforcement learning models now provide principled guides for a wide range of reward learning e... more Reinforcement learning models now provide principled guides for a wide range of reward learning experiments in animals and humans. One key learning (error) signal in these models is experiential and reports ongoing temporal differences between expected and experienced reward. However, these same abstract learning models also accommodate the existence of another class of learning signal that takes the form of a fictive error encoding ongoing differences between experienced returns and returns that ''could-have-been-experienced'' if decisions had been different. These observations suggest the hypothesis that, for all real-world learning tasks, one should expect the presence of both experiential and fictive learning signals. Motivated by this possibility, we used a sequential investment game and fMRI to probe ongoing brain responses to both experiential and fictive learning signals generated throughout the game. Using a large cohort of subjects (n ‫؍‬ 54), we report that fictive learning signals strongly predict changes in subjects' investment behavior and correlate with fMRI signals measured in dopaminoceptive structures known to be involved in valuation and choice.

Abstract Brain reward circuitry, including ventral striatum and orbitofrontal cortex, has been in... more Abstract Brain reward circuitry, including ventral striatum and orbitofrontal cortex, has been independently implicated in preferences for fair and cooperative outcomes as well as learning of reputations.

A property right is a guarantee allowing action within guidelines defined by the right. The guara... more A property right is a guarantee allowing action within guidelines defined by the right. The guarantee is against reprisal, in that a property right places restrictions on punishment strategies that might otherwise be used to insure cooperative behavior. Property rights might be viewed as a means by which society legitimizes (makes “fair” or acceptable) the actions of a rights holder. Such rights are taken for granted in private ownership economies.

Abstract Given that human trust behavior is heritable and intranasal administration of oxytocin e... more Abstract Given that human trust behavior is heritable and intranasal administration of oxytocin enhances trust, the oxytocin receptor (OXTR) gene is an excellent candidate to investigate genetic contributions to individual variations in trust behavior. Although a single-nucleotide polymorphism involving an adenine (A)/guanine (G) transition (rs53576) has been associated with socio-emotional phenotypes, its link to trust behavior is unclear.

Anna Gunnthorsdottir, Australian Graduate School of Management Roumen Vragov, City University of ... more Anna Gunnthorsdottir, Australian Graduate School of Management Roumen Vragov, City University of NY Kevin McCabe, George Mason University Stefan Seifert, Technical University Karlsruhe Keywords: social dilemmas, Nash equilibrium, non-cooperative games, coordination, mechanism design, experiment.

Abstract We design an experiment to study the effect of reputation building on trust and reciproc... more Abstract We design an experiment to study the effect of reputation building on trust and reciprocity in a two period investment game. In the investment game a first mover decides how much money (up to $10) to invest. It is common knowledge that the amount invested will triple by the time it reaches the second mover. The second mover must then decide how much of the tripled money to keep and how much to return. The money returned does not triple a second time.

ABSTRACT Recent bargaining experiments have cast serious doubt on the ability of cooperative and ... more ABSTRACT Recent bargaining experiments have cast serious doubt on the ability of cooperative and non—cooperative game theory to explain observed behavior. we argue that the experimental results that are inconsistent with traditional cooperative game theory are nonetheless consistent with non-cooperative game theory.

EXPERIMENTS ON THE EFFECTS OF COST- SHIFTING, COURT COSTS, AND DISCOVERY ON THE EFFICIENT SETTLEM... more EXPERIMENTS ON THE EFFECTS OF COST- SHIFTING, COURT COSTS, AND DISCOVERY ON THE EFFICIENT SETTLEMENT OF TORT CLAIMS Laura Inglis, Kevin McCabe, Steve Rassenti, Daniel Simmons, and Erik Tallroth* I. Introduction 89 II. Legal Background 91 A Cost-Shifting 91 B. Court Costs 94 C. Discovery 96 III. Experimental Design 98 A The Economic Environment 98 B. The Legal Process �� 99 C. Experimental Treatments 100 D. Experimental Procedures 102 IV. Results 104 A Measurement 104 B. Data Analysis 105 1.

Abstract We use an extensive form two-person game as the basis for two experiments designed to co... more Abstract We use an extensive form two-person game as the basis for two experiments designed to compare the behavior of two groups of subjects with each other and with the subgame perfect theoretical prediction in an anonymous interaction protocol. The two subject groups are undergraduates and advanced graduate students, the latter having studied economics and game theory. There is no difference in their choice behavior, and both groups depart substantially from game theoretic predictions.

In this paper, we use experimental methods to investigate the performance of different market ins... more In this paper, we use experimental methods to investigate the performance of different market institutions and systems of property rights for the trading of a composite good. A composite good is a collection of well defined constituent goods (and/or services). From our study we propose a new economic institution for the pricing and exchange of composite goods.

Abstract Much has been written about how law as an institution has developed to solve many proble... more Abstract Much has been written about how law as an institution has developed to solve many problems that human societies face. Inherent in all of these explanations are models of how humans make decisions. This article discusses what current neuroscience research tells us about the mechanisms of human decision making of particular relevance to law. This research indicates that humans are both more capable of solving many problems than standard economic models predict, but also limited in ways those models ignore.

Abstract Cooperation between individuals requires the ability to infer each other's mental states... more Abstract Cooperation between individuals requires the ability to infer each other's mental states to form shared expectations over mutual gains and make cooperative choices that realize these gains. From evidence that the ability for mental state attribution involves the use of prefrontal cortex, we hypothesize that this area is involved in integrating theory-of-mind processing with cooperative actions. We report data from a functional MRI experiment designed to test this hypothesis.

Abstract The theory of games provides a mathematical formalization of strategic choices, which ha... more Abstract The theory of games provides a mathematical formalization of strategic choices, which have been studied in both economics and neuroscience, and more recently has become the focus of neuroeconomics experiments with human and non-human actors. This paper reviews the results from a number of game experiments that establish a unitary system for forming subjective expected utility maps in the brain, and acting on these maps to produce choices.

. In this essay, we develop an R& D model with patent licensing and multiple innovations. The mod... more . In this essay, we develop an R& D model with patent licensing and multiple innovations. The model is amenable to a surprjzjngly general study of the economics of patent licensing, and improves on previous studies in several ways. Since multiple innovations are possible, all licensing arrangements are negotiated in an active and competitive R& D environment. In addition, license charges and firms' R&D investment and production levels are all decision variables and their equj-

Abstract By around the age of 4 years, children “can work out what people might know, think or be... more Abstract By around the age of 4 years, children “can work out what people might know, think or believe” based on what they say or do. This is called “mindreading,” which builds upon the human ability to infer the intentions of others. Game theory makes a strong assumption about what individual A can expect about B's intentions and vice versa, viz.

It is well known that property rights can privatize incentives for the provision of goods that pr... more It is well known that property rights can privatize incentives for the provision of goods that provide public benefits. Unfortunately, it is often infeasible to implement a property rights system which truly privatizes incentives by making benefits proportional to investments. 1 Nevertheless, there is substantial evidence, including Ronald Coase's (1974) historical research on Great Britain's lighthouse system, that suggests most public goods can be provided privately even without such a system. 2 So how are public goods provided?


European Journal of Political Economy, 1989

Proceedings of The National Academy of Sciences, 2000

By around the age of 4 years, children ''can work out what people might know, think or believe'' ... more By around the age of 4 years, children ''can work out what people might know, think or believe'' based on what they say or do. This is called ''mindreading,'' which builds upon the human ability to infer the intentions of others. Game theory makes a strong assumption about what individual A can expect about B's intentions and vice versa, viz. that each is a self-interested opponent of the other and will reliably analyze games by using such basic principles as dominance and backward induction, and behave as if the normal form of an extensive form game is equivalent to the latter. But the extensive form allows intentions to be detected from actual sequential play and is therefore not necessarily equivalent psychologically to the normal form. We discuss Baron-Cohen's theory of the mindreading system [Baron-Cohen, S. (1995) Mindblindness: An Essay on Autism and Theory of Mind (MIT Press, Cambridge, MA)] to motivate the comparison of behavior in an extensive form game with its corresponding normal form. As in the work of Rapoport [Rapoport, A. (1997) Int. J. Game Theory 26, 113-136] and Schotter et al. [Schotter, A., Wiegelt, K. & Wilson, C. (1994) Games Econ. , we find consistent differences in behavior between the normal and extensive forms. In particular, we observe attempts to cooperate, and in some treatments we observe the achievement of cooperation, occurring more frequently in the extensive form. Cooperation in this context requires reciprocity, which is more difficult to achieve by means of intentionality detection in the normal as opposed to the extensive form games we study.

Personality and Social Psychology Bulletin, 2001

Allowing players in public goods games to make small incremen-tal commitments to contributing to ... more Allowing players in public goods games to make small incremen-tal commitments to contributing to the good might facilitate cooperation because it helps to prevent players from being “free ridden,” contributing more to the public good than other group members. Two ...

Proceedings of The National Academy of Sciences, 2001

Cooperation between individuals requires the ability to infer each other's mental states to form ... more Cooperation between individuals requires the ability to infer each other's mental states to form shared expectations over mutual gains and make cooperative choices that realize these gains. From evidence that the ability for mental state attribution involves the use of prefrontal cortex, we hypothesize that this area is involved in integrating theory-of-mind processing with cooperative actions. We report data from a functional MRI experiment designed to test this hypothesis. Subjects in a scanner played standard two-person ''trust and reciprocity'' games with both human and computer counterparts for cash rewards. Behavioral data shows that seven subjects consistently attempted cooperation with their human counterpart. Within this group prefrontal regions are more active when subjects are playing a human than when they are playing a computer following a fixed (and known) probabilistic strategy. Within the group of five noncooperators, there are no significant differences in prefrontal activation between computer and human conditions.

Proceedings of The National Academy of Sciences, 2007

Reinforcement learning models now provide principled guides for a wide range of reward learning e... more Reinforcement learning models now provide principled guides for a wide range of reward learning experiments in animals and humans. One key learning (error) signal in these models is experiential and reports ongoing temporal differences between expected and experienced reward. However, these same abstract learning models also accommodate the existence of another class of learning signal that takes the form of a fictive error encoding ongoing differences between experienced returns and returns that ''could-have-been-experienced'' if decisions had been different. These observations suggest the hypothesis that, for all real-world learning tasks, one should expect the presence of both experiential and fictive learning signals. Motivated by this possibility, we used a sequential investment game and fMRI to probe ongoing brain responses to both experiential and fictive learning signals generated throughout the game. Using a large cohort of subjects (n ‫؍‬ 54), we report that fictive learning signals strongly predict changes in subjects' investment behavior and correlate with fMRI signals measured in dopaminoceptive structures known to be involved in valuation and choice.

Abstract Brain reward circuitry, including ventral striatum and orbitofrontal cortex, has been in... more Abstract Brain reward circuitry, including ventral striatum and orbitofrontal cortex, has been independently implicated in preferences for fair and cooperative outcomes as well as learning of reputations.

A property right is a guarantee allowing action within guidelines defined by the right. The guara... more A property right is a guarantee allowing action within guidelines defined by the right. The guarantee is against reprisal, in that a property right places restrictions on punishment strategies that might otherwise be used to insure cooperative behavior. Property rights might be viewed as a means by which society legitimizes (makes “fair” or acceptable) the actions of a rights holder. Such rights are taken for granted in private ownership economies.

Abstract Given that human trust behavior is heritable and intranasal administration of oxytocin e... more Abstract Given that human trust behavior is heritable and intranasal administration of oxytocin enhances trust, the oxytocin receptor (OXTR) gene is an excellent candidate to investigate genetic contributions to individual variations in trust behavior. Although a single-nucleotide polymorphism involving an adenine (A)/guanine (G) transition (rs53576) has been associated with socio-emotional phenotypes, its link to trust behavior is unclear.

Anna Gunnthorsdottir, Australian Graduate School of Management Roumen Vragov, City University of ... more Anna Gunnthorsdottir, Australian Graduate School of Management Roumen Vragov, City University of NY Kevin McCabe, George Mason University Stefan Seifert, Technical University Karlsruhe Keywords: social dilemmas, Nash equilibrium, non-cooperative games, coordination, mechanism design, experiment.

Abstract We design an experiment to study the effect of reputation building on trust and reciproc... more Abstract We design an experiment to study the effect of reputation building on trust and reciprocity in a two period investment game. In the investment game a first mover decides how much money (up to $10) to invest. It is common knowledge that the amount invested will triple by the time it reaches the second mover. The second mover must then decide how much of the tripled money to keep and how much to return. The money returned does not triple a second time.

ABSTRACT Recent bargaining experiments have cast serious doubt on the ability of cooperative and ... more ABSTRACT Recent bargaining experiments have cast serious doubt on the ability of cooperative and non—cooperative game theory to explain observed behavior. we argue that the experimental results that are inconsistent with traditional cooperative game theory are nonetheless consistent with non-cooperative game theory.

EXPERIMENTS ON THE EFFECTS OF COST- SHIFTING, COURT COSTS, AND DISCOVERY ON THE EFFICIENT SETTLEM... more EXPERIMENTS ON THE EFFECTS OF COST- SHIFTING, COURT COSTS, AND DISCOVERY ON THE EFFICIENT SETTLEMENT OF TORT CLAIMS Laura Inglis, Kevin McCabe, Steve Rassenti, Daniel Simmons, and Erik Tallroth* I. Introduction 89 II. Legal Background 91 A Cost-Shifting 91 B. Court Costs 94 C. Discovery 96 III. Experimental Design 98 A The Economic Environment 98 B. The Legal Process �� 99 C. Experimental Treatments 100 D. Experimental Procedures 102 IV. Results 104 A Measurement 104 B. Data Analysis 105 1.

Abstract We use an extensive form two-person game as the basis for two experiments designed to co... more Abstract We use an extensive form two-person game as the basis for two experiments designed to compare the behavior of two groups of subjects with each other and with the subgame perfect theoretical prediction in an anonymous interaction protocol. The two subject groups are undergraduates and advanced graduate students, the latter having studied economics and game theory. There is no difference in their choice behavior, and both groups depart substantially from game theoretic predictions.

In this paper, we use experimental methods to investigate the performance of different market ins... more In this paper, we use experimental methods to investigate the performance of different market institutions and systems of property rights for the trading of a composite good. A composite good is a collection of well defined constituent goods (and/or services). From our study we propose a new economic institution for the pricing and exchange of composite goods.

Abstract Much has been written about how law as an institution has developed to solve many proble... more Abstract Much has been written about how law as an institution has developed to solve many problems that human societies face. Inherent in all of these explanations are models of how humans make decisions. This article discusses what current neuroscience research tells us about the mechanisms of human decision making of particular relevance to law. This research indicates that humans are both more capable of solving many problems than standard economic models predict, but also limited in ways those models ignore.

Abstract Cooperation between individuals requires the ability to infer each other's mental states... more Abstract Cooperation between individuals requires the ability to infer each other's mental states to form shared expectations over mutual gains and make cooperative choices that realize these gains. From evidence that the ability for mental state attribution involves the use of prefrontal cortex, we hypothesize that this area is involved in integrating theory-of-mind processing with cooperative actions. We report data from a functional MRI experiment designed to test this hypothesis.

Abstract The theory of games provides a mathematical formalization of strategic choices, which ha... more Abstract The theory of games provides a mathematical formalization of strategic choices, which have been studied in both economics and neuroscience, and more recently has become the focus of neuroeconomics experiments with human and non-human actors. This paper reviews the results from a number of game experiments that establish a unitary system for forming subjective expected utility maps in the brain, and acting on these maps to produce choices.

. In this essay, we develop an R& D model with patent licensing and multiple innovations. The mod... more . In this essay, we develop an R& D model with patent licensing and multiple innovations. The model is amenable to a surprjzjngly general study of the economics of patent licensing, and improves on previous studies in several ways. Since multiple innovations are possible, all licensing arrangements are negotiated in an active and competitive R& D environment. In addition, license charges and firms' R&D investment and production levels are all decision variables and their equj-

Abstract By around the age of 4 years, children “can work out what people might know, think or be... more Abstract By around the age of 4 years, children “can work out what people might know, think or believe” based on what they say or do. This is called “mindreading,” which builds upon the human ability to infer the intentions of others. Game theory makes a strong assumption about what individual A can expect about B's intentions and vice versa, viz.

It is well known that property rights can privatize incentives for the provision of goods that pr... more It is well known that property rights can privatize incentives for the provision of goods that provide public benefits. Unfortunately, it is often infeasible to implement a property rights system which truly privatizes incentives by making benefits proportional to investments. 1 Nevertheless, there is substantial evidence, including Ronald Coase's (1974) historical research on Great Britain's lighthouse system, that suggests most public goods can be provided privately even without such a system. 2 So how are public goods provided?