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Neuroeconomic Foundations of Trust and Social Preferences

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Author Info
Ernst Fehr () (University of Zurich and IZA Bonn)
Urs Fischbacher (University of Zurich)
University of Zurich (University of Zurich)

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Abstract

This paper discusses recent neuroeconomic evidence related to other-regarding behaviors and the decision to trust in other people’s other-regarding behavior. This evidence supports the view that people derive nonpecuniary utility (i) from mutual cooperation in social dilemma (SD) games and (ii) from punishing unfair behavior. Thus, mutual cooperation and the punishment of free riders in SD games is not irrational, but better understood as rational behavior of people with corresponding social preferences. We also report the results of a recent study that examines the impact of the neuropeptide Oxytocin (OT) on trusting and trustworthy behavior in a sequential SD. Animal studies have identified Oxytocin as a hormone that induces prosocial approach behavior, suggesting that it may also affect prosocial behavior in humans. Indeed, the study shows that subjects given Oxytocin exhibit much more trusting behavior, suggesting that OT has a direct impact on certain aspects of subjects’ social preferences. Interestingly, however, although Oxytocin affects trusting behavior, it has no effect on subjects’ trustworthiness.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1641.

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Length: 17 pages
Date of creation: Jun 2005
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Handle: RePEc:iza:izadps:dp1641

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Related research
Keywords: social preferences; foundations of trust; neuroeconomic;

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Find related papers by JEL classification:
A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Aleksander Berentsen & Gabriele Camera & C hristopher W aller, 2005. "The Distribution Of Money Balances And The Nonneutrality Of Money," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 46(2), pages 465-487, 05. [Downloadable!] (restricted)
    Other versions:
  2. Bruno S. Frey & Christine Benesch & Alois Stutzer, 2005. "Does Watching TV Make Us Happy?," CREMA Working Paper Series 2005-15, Center for Research in Economics, Management and the Arts (CREMA). [Downloadable!]
    Other versions:
  3. Fehr, Ernst & Kremhelmer, Susanne & Schmidt, Klaus M., 2005. "Fairness and the Optimal Allocation of Ownership Rights," CEPR Discussion Papers 5369, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  4. Lalive, R. & Ours, J.C. van & Zweimuller, J., 2004. "How changes in financial incentives affect the duration of unemployment," Discussion Paper 86, Tilburg University, Center for Economic Research. [Downloadable!]
    Other versions:
  5. Ernst Fehr & Simon Gaechter, 2003. "Altruistic Punishment in Humans," Microeconomics 0305006, EconWPA. [Downloadable!]
  6. Alois Stutzer & Lukas Kienast, 2004. "Demokratische Beteiligung und Staatsausgaben: Die Auswirkungen des Frauenstimmrechts," CREMA Working Paper Series 2004-26, Center for Research in Economics, Management and the Arts (CREMA). [Downloadable!]
    Other versions:
  7. Tania Singer & Ernst Fehr, 2005. "The Neuroeconomics of Mind Reading and Empathy," IZA Discussion Papers 1647, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  8. Alois Stutzer & Bruno S. Frey, 2004. "Making International Organizations More Democratic," CREMA Working Paper Series 2004-28, Center for Research in Economics, Management and the Arts (CREMA). [Downloadable!]
    Other versions:
  9. Ernst Fehr & Urs Fischbacher & University of Zurich, 2005. "Neuroeconomic Foundations of Trust and Social Preferences," IZA Discussion Papers 1641, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  10. Peter Woehrmann & Willi Semmler & Martin Lettau, . "Nonparametric Estimation of the Time-varying Sharpe Ratio in Dynamic Asset Pricing Models," IEW - Working Papers iewwp225, Institute for Empirical Research in Economics - IEW. [Downloadable!]
  11. Falk, Armin & Zweimüller, Josef, 2005. "Unemployment and Right-Wing Extremist Crime," CEPR Discussion Papers 4997, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  12. Bruno S. Frey & Alois Stutzer, . "The Role of Direct Democracy and Federalism in Local Power," IEW - Working Papers iewwp209, Institute for Empirical Research in Economics - IEW. [Downloadable!]
    Other versions:
  13. Max Gruetter, 2005. "Returns to Foreign Education: Yet Another But Different Cross Country Analysis," IZA Discussion Papers 1615, Institute for the Study of Labor (IZA). [Downloadable!]
  14. De Giorgi, Enrico & Post, Thierry, 2008. "Second-Order Stochastic Dominance, Reward-Risk Portfolio Selection, and the CAPM," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 43(02), pages 525-546, June. [Downloadable!]
  15. Bruno S. Frey & Simon Luechinger & Alois Stutzer, 2004. "Calculating Tragedy: Assessing the Costs of Terrorism," CREMA Working Paper Series 2004-23, Center for Research in Economics, Management and the Arts (CREMA). [Downloadable!]
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  16. Reto Foellmi & Josef Zweimüller, . "Income Distribution and Demand-induced Innovations," IEW - Working Papers iewwp212, Institute for Empirical Research in Economics - IEW. [Downloadable!]
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  17. Gruetter, Max & Lalive, Rafael, 2004. "The Importance of Firms in Wage Determination," IZA Discussion Papers 1367, Institute for the Study of Labor (IZA). [Downloadable!]
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  18. Pavlo R. Blavatskyy, . "A Stochastic Expected Utility Theory," IEW - Working Papers iewwp231, Institute for Empirical Research in Economics - IEW. [Downloadable!]
  19. Martin Brown & Christian Zehnder, 2005. "Credit Registries, Relationship Banking and Loan Repayment," IEW - Working Papers iewwp240, Institute for Empirical Research in Economics - IEW. [Downloadable!]
  20. Bruno S. Frey & Alois Stutzer, 2004. "Economic Consequences of Mispredicting Utility," CREMA Working Paper Series 2005-04, Center for Research in Economics, Management and the Arts (CREMA). [Downloadable!]
    Other versions:
  21. Rafael Lalive & Josef Zweimüller, . "Does Parental Leave Affect Fertility and Return-to-Work? Evidence from a ”True Natural Experiment”," IEW - Working Papers iewwp242, Institute for Empirical Research in Economics - IEW. [Downloadable!]
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  22. Christian Ewerhart & Nuno Cassola & Steen Ejerskov & Natacha Valla, . "Optimal Allotment Policy in Central Bank Open Market Operations," IEW - Working Papers iewwp201, Institute for Empirical Research in Economics - IEW. [Downloadable!]
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  23. Aleksander Berentsen & Gabriele Camera & Christopher Waller, 2005. "Money, Credit and Banking," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  24. Bruno S. Frey, 2005. "Knight Fever – Towards an Economics of Awards," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  25. Armin Falk & Ernst Fehr & Christian Zehnder, . "The Behavioral Effects of Minimum Wages," IEW - Working Papers iewwp247, Institute for Empirical Research in Economics - IEW. [Downloadable!]
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Fehr, Ernst & Singer, Tania, 2005. "The Neuroconomics of Mind Reading and Empathy," CEPR Discussion Papers 5128, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  2. Philipp C. Wichardt & Pavlo R. Blavatskyy, . "Base-Rate Neglect and Imperfect Information Acquisition," IEW - Working Papers iewwp233, Institute for Empirical Research in Economics - IEW. [Downloadable!]
  3. Biel, Anders & Johansson-Stenman, Olof & Nilsson, Andreas, 2006. "Emotions, Morality and Public Goods: The WTA-WTP Disparity Revisited," Working Papers in Economics 193, Göteborg University, Department of Economics. [Downloadable!]
  4. Ernst Fehr & Urs Fischbacher & University of Zurich, 2005. "Neuroeconomic Foundations of Trust and Social Preferences," IZA Discussion Papers 1641, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  5. Peter Woehrmann & Willi Semmler & Martin Lettau, . "Nonparametric Estimation of the Time-varying Sharpe Ratio in Dynamic Asset Pricing Models," IEW - Working Papers iewwp225, Institute for Empirical Research in Economics - IEW. [Downloadable!]
  6. Margit Osterloh & Bruno S. Frey, . "Shareholders Should Welcome Employees as Directors," IEW - Working Papers iewwp228, Institute for Empirical Research in Economics - IEW. [Downloadable!]
    Other versions:
  7. Falk, Armin & Fehr, Ernst & Zehnder, Christian, 2005. "The Behavioural Effects of Minimum Wages," CEPR Discussion Papers 5115, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  8. Ernst Fehr & Susanne Kremhelmer & Klaus M. Schmidt, . "Fairness and the Optimal Allocation of Ownership Rights," IEW - Working Papers iewwp224, Institute for Empirical Research in Economics - IEW. [Downloadable!]
    Other versions:
  9. Philipp C. Wichardt, . "An Application of Global Games to Signalling Models," IEW - Working Papers iewwp223, Institute for Empirical Research in Economics - IEW. [Downloadable!]
  10. Salvador Barberà & Anke Gerber, . "A Note on the Impossibility of a Satisfactory Concept of Stability for Coalition Formation Games," IEW - Working Papers iewwp238, Institute for Empirical Research in Economics - IEW. [Downloadable!]
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  11. Iris Bohnet & Fiona Greig & Benedikt Herrmann & Richard Zeckhauser, 2007. "Betrayal Aversion: Evidence from Brazil, China, Oman, Switzerland, Turkey, and the United States," Discussion Papers 2007-08, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham. [Downloadable!]
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  12. Lorenz Blume & Detlef Sack, 2006. "Regional Preferences for Hierarchies, Markets, and Networks: Exploring Social Capital Data for Germany," Discussion Papers in Economics 85/06, University of Kassel, Institute of Economics. [Downloadable!]
  13. Anke Gerber, . "Learning in and about Games," IEW - Working Papers iewwp234, Institute for Empirical Research in Economics - IEW. [Downloadable!]
  14. Peter Woehrmann, . "A dynamic model of the financial–real interaction as a model selection criterion for nonparametric stock market prediction," IEW - Working Papers iewwp226, Institute for Empirical Research in Economics - IEW. [Downloadable!]
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