Experimental Neuroeconomics and Non-cooperative Games (original) (raw)

Neural correlates of economic game playing

Philosophical Transactions of the Royal Society B: Biological Sciences, 2008

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. Social situations require the brain to build an understanding of the other person using neuronal mechanisms that share affective and intentional mental states. These systems allow subjects to better predict other players' choices, and allow them to modify their subjective utility maps to value pro-social strategies. New results for a trust game are presented, which show that the trust relationship includes systems common to both trusting and trustworthy behaviour, but they also show that the relative temporal positions of first and second players require computations unique to that role.

The neuroeconomics of strategic interaction

We describe here the theoretical, behavioral and neural bases of strategic interaction -multiagent situations where the outcome of one's choice depends on the actions of others. Predicting others' actions requires strategic thinking, thus thinking about what the others might think and believe. Game theory provides a canonical model of strategic thinking implicit in the notion of equilibrium and common knowledge of rationality. Behavioral evidence shows departures from equilibrium play and suggests different models of strategic thinking based on bounded rationality. We report neural evidence in support of non-equilibrium models of strategic thinking. These models suggest a cognitive-hierarchy theory of brain and behavior, according to which people use different levels of strategic thinking that are associated with specific neural computations.

Neural Substrates of Decision-Making in Economic Games

2007

In economic experiments decisions often differ from game-theoretic predictions. Why are people generous in one-shot ultimatum games with strangers? Is there a benefit to generosity toward strangers? Research on the neural substrates of decisions suggests that some choices are hormone-dependent. By artificially stimulating subjects with neuroactive hormones, we can identify which hormones and brain regions participate in decisionmaking, to what degree and in what direction. Can a hormone make a person generous while another stingy? In this paper, two laboratory experiments are described using the hormones oxytocin (OT) and arginine vasopressin (AVP). Concentrations of these hormones in the brain continuously change in response to external stimuli. OT enhances trust ), reduce fear from strangers (C. Sue Carter 1998), and has anti-anxiety effects (Kerstin Uvnäs-Moberg, Maria Peterson 2005). AVP enhances attachment and bonding with kin in monogamous male mammals (Jennifer N. Ferguson et al. 2002) and increases reactive aggression (C. Sue Carter 2007). Dysfunctions of OT and/or AVP reception have been associated with autism (Miranda M. Lim et al. 2005).

Neuroeconomics OpeningBlackBoxofHumanBehavior

This paper introduces an emerging interdisciplinary research field, namely neuroeconomics, which uses the neuroscientific methods to investigate the neural systems supporting economically relevant behaviors. Traditional economic research is restricted to the level of describing decision behaviors, leaving the cognitive mechanisms behind them unknown. It also fails to predict many decision behaviors in real life. The combination of neuroscience and economics makes it possible to uncover the underlying mental and neural processes of economic decision making. This paper reviews the findings from the neuroeconomic literature on encoding of utility in the brain, showing that neuroeconomic research can test the validity of economic concepts and theories and provide new explanations to economic phenomenon. It discusses the important role the emotion plays in economic decision making and the associated neural evidence, suggesting the possibility of understanding the impact of emotion upon decision making by measuring the neural activity of emotion-related brain regions. This paper also summarizes neuroscientific studies on cooperation and trust in monetary games, pointing out that the trend of neuroeconomic research is to model the real life decision making in the laboratory with solid ecological validity. Neuroeconomics provides not only neuroscientific evidence for economic theories, such as the prospect theory, the regret theory and the game theory, but also foundations for more comprehensive and powerful economic models. neuroeconomics, neuroimaging, economic behavior, utility, regret, cooperation

Introduction to Cognitive Economics

2007

Index 1. Cognitive and behavioural economics 2. Experimental economics 2.1 Laboratory methods 2.2 Biases in judgment 2.3 Choice under risk and uncertainty 2.4 Choice anomalies 3. Constructive reactions 3.1 Prospect theory 3.2 Connessionism and neural networks 3.3 Artificial intelligence 4. Neuroeconomics 4.1 Definitions and tools 4.2 Intertemporal Choice and self-control 4.3 Decision-making under risk and uncertainty 4.4 Mirror neurons and strategic choice 4.5 Trust game and brain activation 4.6 Oxytocin and trusting behavior Main References

Neuroeconomics and the Economic Logic of Behavior

Analyse & Kritik, 2007

Recent neuroeconomic studies challenge the conventional economic logic of behavior. After an introduction to some starting points of brain research in ‘classical’ economics we discuss the final and contingent causes of rational and irrational behavior in neuroeconomics and standard economics and present the concept of expanded rationality models (ERM) which imports neuroeconomic elements like emotions, beliefs and neuroscientific constraints and exports improved testable predictions. The typical structure of neuroeconomic proof of economic models and the imprecise neuroscientific measurement let us suggest a feed-back structure of economic research. We apply Hirshleifer’s conception of macro-/micro-technology and contrast it to the neuroeconomic black box critique on economic theory. Furthermore, instead of direct adjustment of preference structures we propose the auxiliary creation of neuroeconomic constraints like action-dependent or outcome-dependent neuroeconomic belief constrai...

Emotions and cooperation in economic games

In this paper, we examine decisions to cooperate in economic games. We investigate which payoffs give players the greatest pleasure and whether the pleasure they feel about payoffs predicts their decisions to cooperate. To do this, we modify the ultimatum and dictator games by asking players to consider a fixed set of offers and report their preferences over all offers. Players also report the pleasure they imagine feeling from each possible payoff. Results show that players differ in the extent to which they derive pleasure from fairness or greediness. They also differ in the extent to which their choices depend on what we call bstrategicQ and bnon-strategicQ pleasure. Strategic pleasure is the expected pleasure of offers, whereas non-strategic pleasure is the pleasure of accepted payoffs. Players whose pleasure primarily depends on larger payoffs tend to make fair offers in the ultimatum game and selfish offers in the dictator game. They maximize strategic pleasure in the ultimatum game and non-strategic pleasure in the dictator game. Players who derive greater pleasure from fairness tend to act fairly in both games. These players maximize non-strategic pleasure. Brain imaging studies should address the question of whether the observed differences in pleasure and preference are systematically linked to differences in neurological activation.

Does Elicitation Method Matter? Behavioral and Neuroimaging Evidence from Capacity Allocation Game

Production and Operations Management, 2015

T o date, it has not been elucidated whether the strategy method and the direct-response method lead to different behaviors in experiments of economic games. In this study, we investigate this issue under a multi-round setting of the capacity allocation game with both of the elicitation methods. In the first experiment (regular behavioral experiment), subjects are paired to make decisions in a laboratory through a computer network platform. In the second experiment (neuroimaging experiment), the functional magnetic resonance imaging (fMRI) technique is applied to observe similarities and differences in brain activities between the two elicitation methods. The results show that no significant difference is observed in the ordering behaviors between the two methods. Meanwhile, the neuroimaging data reveal that the strategy method induces comparable activations in similar brain regions, as does the direct-response method. Additionally, it is more likely that subjects adjust their decisions during the feedback phase, rather than during the decision phase. Our results indicate that, in multi-round game experiments without features such as emotion, the effect of the elicitation method is not likely to be exhibited.

Guest Editorial Neuroeconomics: A Neural Engineering Perspective

IEEE Transactions on Neural Systems and Rehabilitation Engineering, 2000

The basic reciprocity between individual parts and collective organization constitutes a key scientific question spanning the biological and social sciences. Such reciprocity is accompanied by the absence of direct linkages between levels of description giving rise to what is often referred to as the aggregation or nonequivalence problem between levels of analysis. This issue is encountered both in neuroscience and economics. So far, in spite of being identified and extensively discussed in various (other) scientific fields, the problem of understanding the nature of the interactions and coordination dynamics between individual (neuron agent) and collective (neural networks population of humans) behaviors has received little, if any attention in the growing field of neuroeconomics. The present contribution focuses on bringing a theoretical perspective to the interpretation of experiments recently published in this field and addressing how the concepts and methods of coordination dynamics may impact future research. First, we very briefly discuss the links between biology and economics. Second, we address the nonequivalence problem between different levels of analysis and the concept of reciprocal causality. Third, neuroeconomics studies that investigate the neural underpinnings of social decision making in the context of two economic games (trust and ultimatum) are reviewed to highlight issues that arise when experimental results exist at multiple scales of observation and description. Finally, in the last two sections, we discuss how coordination dynamics might provide novel routes to studying and modelling the relation between brain activity and decision making.

The methodologies of neuroeconomics

Journal of Economic Methodology, 2010

We critically review the methodological practices of two research programs which are jointly called 'neuroeconomics'. We defend the first of these, termed 'neurocellular economics' (NE) by Ross , from an attack on its relevance by Gul and Pesendorfer (2008) (GP). This attack arbitrarily singles out some but not all processing variables as unimportant to economics, is insensitive to the realities of empirical theory testing, and ignores the central importance to economics of 'ecological rationality' . GP ironically share this last attitude with advocates of 'behavioral economics in the scanner' (BES), the other, and better known, branch of neuroeconomics. We consider grounds for skepticism about the accomplishments of this research program to date, based on its methodological individualism, its ad hoc econometrics, its tolerance for invalid reverse inference, and its inattention to the difficulties involved in extracting temporally lagged data if people's anticipation of reward causes pre-emptive blood flow.