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Neural Substrates of Decision-Making in Economic Games

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  • Stanton, Angela A.

Abstract

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 (Michael Kosfeld et al. 2005b), 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). In Chapter One I review past experiments with the ultimatum (UG) and dictator (DG) games and visit some of the major results in the literature. In Chapter Two I present the results of my laboratory experiment where I examine why people are generous in one-shot economic games with strangers. I hypothesize that oxytocin would enhance generosity in the UG. Players in the OT group were much more generous than those in the placebo—OT offers in the UG were 80% higher than offers on placebo. Enhanced generosity was not due to altruism as there was no effect on DG offers. This implies that other-regarding preferences are at play in the amount of money sent but only in a reciprocal context. The third chapter presents an experiment on punishment. I hypothesized that AVP would increase rejections and stinginess in the UG and TG. Results show that AVP affects rejections and stinginess in small groups but not in large ones. Chapter Four contains the summary of future research suggestions.

Suggested Citation

  • Stanton, Angela A., 2007. "Neural Substrates of Decision-Making in Economic Games," MPRA Paper 4030, University Library of Munich, Germany, revised 10 Jun 2007.
  • Handle: RePEc:pra:mprapa:4030
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    Cited by:

    1. Zak, Paul J., 2011. "The physiology of moral sentiments," Journal of Economic Behavior & Organization, Elsevier, vol. 77(1), pages 53-65, January.
    2. Vladimír Gazda & Marek Gróf & Július Horváth & Matúš Kubák & Tomáš Rosival, 2012. "Agent based model of a simple economy," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 7(2), pages 209-221, October.
    3. Stanton, Angela A., 2008. "Neuroeconomics: A Critique of ‘Neuroeconomics: A Critical Reconsideration’," MPRA Paper 13957, University Library of Munich, Germany, revised 10 Mar 2009.
    4. Angela A. Stanton & Isabell M. Welpe, 2010. "Risk and Ambiguity: Entrepreneurial Research from the Perspective of Economics," Chapters,in: Neuroeconomics and the Firm, chapter 2 Edward Elgar Publishing.

    More about this item

    Keywords

    Oxytocin; Vasopressin; ultimatum game; dictator game; trust game; generosity; altruism;

    JEL classification:

    • Y40 - Miscellaneous Categories - - Dissertations - - - Dissertations
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • Z00 - Other Special Topics - - General - - - General

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