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The Neuroeconomics of Trust

Author

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  • Paul J. Zak

    (Claremont Graduate University)

Abstract

The 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.

Suggested Citation

  • Paul J. Zak, 2005. "The Neuroeconomics of Trust," Experimental 0507004, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpex:0507004
    Note: Type of Document - pdf; pages: 24
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/exp/papers/0507/0507004.pdf
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    References listed on IDEAS

    as
    1. McCabe, Kevin & Houser, Daniel & Ryan, Lee & Smith, Vernon & Trouard, Ted, 2001. "A Functional Imaging Study of Cooperation in Two-Person reciprocal Exchange," MPRA Paper 5172, University Library of Munich, Germany.
    2. Bruno Frey & Matthias Benz & Alois Stutzer, 2004. "Introducing Procedural Utility: Not Only What, but Also How Matters," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 160(3), pages 377-377, September.
    3. Nancy Buchan & Rachel Croson, 1999. "Gender and Culture: International Experimental Evidence from Trust Games," American Economic Review, American Economic Association, vol. 89(2), pages 386-391, May.
    4. Berg Joyce & Dickhaut John & McCabe Kevin, 1995. "Trust, Reciprocity, and Social History," Games and Economic Behavior, Elsevier, vol. 10(1), pages 122-142, July.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Paul J. Zak & Karla Borja & William T. Matzner & Robert Kurzban, 2005. "The Neuroeconomics of Distrust: Sex Differences in Behavior and Physiology," American Economic Review, American Economic Association, vol. 95(2), pages 360-363, May.
    2. Marina E. Adshade & Brooks A. Kaiser, 2008. "The Origins of the Institutions of Marriage," Working Papers 1180, Queen's University, Department of Economics.
    3. Bongo Adi & Kenneth Amaeshi & Suminori Tokunaga, 2005. "Rational Choice, Scientific Method and Social Scientism," Method and Hist of Econ Thought 0509001, University Library of Munich, Germany.
    4. Marina E. Adshade & Brooks A. Kaiser, 2008. "The Origins of the Institutions of Marriage," Working Papers 1180, Queen's University, Department of Economics.
    5. M. Hussain, 2014. "The Robustness of High Danish National Happiness: A Temporal Cross-Country Analysis of Population Subgroups," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 118(2), pages 759-774, September.
    6. Zak, Paul J. & Fakhar, Ahlam, 2006. "Neuroactive hormones and interpersonal trust: International evidence," Economics & Human Biology, Elsevier, vol. 4(3), pages 412-429, December.

    More about this item

    Keywords

    Oxytocin; social capital; neuroeconomics; development; experiments;

    JEL classification:

    • C9 - Mathematical and Quantitative Methods - - Design of Experiments

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