The Neuroeconomics of Trust
AbstractThe traditional view in economics is that individuals respond to incentives, but absent strong incentives to the contrary selfishness prevails. Moreover, this “greed is good” approach is deemed “rational” behavior. Nevertheless, in daily interactions and in numerous laboratory studies, a high degree of cooperative behavior prevails—even among strangers. A possible explanation for the substantial amount of “irrational” behavior observed in markets (and elsewhere) is that humans are a highly social species and to an extent value what other humans think of them. This behavior can be termed trustworthiness—cooperating when someone places trust in us. I also analyze the cross-country evidence for environments that produce high or low trust. A number of recent experiments from my lab have demonstrated that the neuroactive hormone oxytocin facilitates trust between strangers, and appears to induce trustworthiness. In rodents, oxytocin has been associated with maternal bonding, pro-social behaviors, and in some species long-term pair bonds, but prior to the work reviewed here, the behavioral effects of oxytocin in humans had not been studied. This presentation discusses the neurobiology of positive social behaviors and how these are facilitated by oxytocin. My experiments show that positive social signals cause oxytocin to be released by the brain, producing an unconscious attachment to a stranger. I also discuss recent research that manipulates oxytocin levels, and functional brain imaging research on trust.
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Bibliographic InfoPaper provided by EconWPA in its series Experimental with number 0507004.
Length: 24 pages
Date of creation: 21 Jul 2005
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Note: Type of Document - pdf; pages: 24
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Oxytocin; social capital; neuroeconomics; development; experiments;
Find related papers by JEL classification:
- C9 - Mathematical and Quantitative Methods - - Design of Experiments
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-07-25 (All new papers)
- NEP-CBE-2005-07-25 (Cognitive & Behavioural Economics)
- NEP-EVO-2005-07-25 (Evolutionary Economics)
- NEP-EXP-2005-07-25 (Experimental Economics)
- NEP-HPE-2005-07-25 (History & Philosophy of Economics)
- NEP-SOC-2005-07-25 (Social Norms & Social Capital)
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