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The Neuroeconomics of Mind Reading and Empathy

  • Singer, Tania

    ()

    (University College London)

  • Fehr, Ernst

    ()

    (University of Zurich)

The most fundamental solution concepts in Game Theory – Nash equilibrium, backward induction, and iterated elimination of dominated strategies – are based on the assumption that people are capable of predicting others' actions. These concepts require people to be able to view the game from the other players' perspectives, i.e. to understand others' motives and beliefs. Economists still know little about what enables people to put themselves into others' shoes and how this ability interacts with their own preferences and beliefs. Social neuroscience provides insights into the neural mechanism underlying our capacity to represent others' intentions, beliefs, and desires, referred to as "Theory of Mind" or "mentalizing", and the capacity to share the feelings of others, referred to as "empathy". We summarize the major findings about the neural basis of mentalizing and empathizing and discuss some implications for economics.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1647.

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Length: 16 pages
Date of creation: Jul 2005
Date of revision:
Handle: RePEc:iza:izadps:dp1647
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  12. Gruetter, Max, 2005. "Returns to Foreign Education: Yet Another But Different Cross Country Analysis," IZA Discussion Papers 1615, Institute for the Study of Labor (IZA).
  13. Bruno S. Frey, 2005. "Knight Fever: Towards an Economics of Awards," CREMA Working Paper Series 2005-12, Center for Research in Economics, Management and the Arts (CREMA).
  14. Armin Falk & Ernst Fehr & Christian Zehnder, . "The Behavioral Effects of Minimum Wages," IEW - Working Papers 247, Institute for Empirical Research in Economics - University of Zurich.
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  16. Lalive, Rafael & van Ours, Jan C. & Zweimüller, Josef, 2004. "How Changes in Financial Incentives Affect the Duration of Unemployment," IZA Discussion Papers 1363, Institute for the Study of Labor (IZA).
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  21. Rafael Lalive & Josef Zweimüller, . "Does Parental Leave Affect Fertility and Return-to-Work? Evidence from a ”True Natural Experiment”," IEW - Working Papers 242, Institute for Empirical Research in Economics - University of Zurich.
  22. Reto Foellmi & Josef Zweimüller, . "Income Distribution and Demand-induced Innovations," IEW - Working Papers 212, Institute for Empirical Research in Economics - University of Zurich.
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  25. Patarick Leoni & Stephane Luchini, 2006. "Designing the Financial Tools to Promote Universal Access to AIDS Care," Economics, Finance and Accounting Department Working Paper Series n1711106, Department of Economics, Finance and Accounting, National University of Ireland - Maynooth.
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  29. Christian Ewerhart & Nuno Cassola & Steen Ejerskov & Natacha Valla, 2009. "Optimal allotment policy in central bank open market operations," The European Journal of Finance, Taylor & Francis Journals, vol. 15(4), pages 405-420.
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  34. Bruno S. Frey & Alois Stutzer, 2004. "The Role of Direct Democracy and Federalism in Local Power," CREMA Working Paper Series 2004-25, Center for Research in Economics, Management and the Arts (CREMA).
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