Natural Rationality | decision-making in the economy of nature


Social Neuroeconomics: A Review by Fehr and Camerer

Ernst Fehr and Colin Camerer, two prominent experimental/behavioral/neuro-economists published a new paper in Trends in Cognitive Science on social neuroeconomics. Discussing many studies (this paper is a state-of-the-art review), they conclude that

social reward activates circuitry that overlaps, to a surprising degree, with circuitry that anticipates and represents other types of rewards. These studies reinforce the idea that social preferences for donating money, rejecting unfair offers, trusting others and punishing those who violate norms, are genuine expressions of preference

The authors illustrate this overlap with a the following picture: social and non-social reward elicit similar neural activation (see references for all cited studies at the end of this post):

Figure 1. (from Fehr and Camerer, forthcoming). Parallelism of rewards for oneself and for others: Brain areas commonly activated in (a) nine studies of social reward (..), and (b) a sample of six studies of learning and anticipated own monetary reward (..).

So basically, we have enough evidence to justify a model of rational agents as entertaining social preferences. As I argue in a forthcoming paper (let me know if you want to have a copy), these findings will have normative impact, especially for game-theoretic situations: if a rational agent anticipate other agents's strategies, she better anticipate that they have social preferences. For instance, one might argue that in the Ultimatum Game, it is rational to make a fair offer.

Related posts:

  • Fehr, E. and Camerer, C.F., Social neuroeconomics: the neural circuitry of social preferences, Trends Cogn. Sci. (2007), doi:10.1016/j.tics.2007.09.002

Studies of social reward cited in Fig. 1:

  • [26] J. Rilling et al., A neural basis for social cooperation, Neuron 35 (2002), pp. 395–405.
  • [27] J.K. Rilling et al., Opposing BOLD responses to reciprocated and unreciprocated altruism in putative reward pathways, Neuroreport 15 (2004), pp. 2539–2543.
  • [28] D.J. de Quervain et al., The neural basis of altruistic punishment, Science 305 (2004), pp. 1254–1258.
  • [29] T. Singer et al., Empathic neural responses are modulated by the perceived fairness of others, Nature 439 (2006), pp. 466–469
  • [30] J. Moll et al., Human fronto-mesolimbic networks guide decisions about charitable donation, Proc. Natl. Acad. Sci. U. S. A. 103 (2006), pp. 15623–15628.
  • [31] W.T. Harbaugh et al., Neural responses to taxation and voluntary giving reveal motives for charitable donations, Science 316 (2007), pp. 1622–1625.
  • [32] Tabibnia, G. et al. The sunny side of fairness – preference for fairness activates reward circuitry. Psychol. Sci. (in press).
  • [55] T. Singer et al., Brain responses to the acquired moral status of faces, Neuron 41 (2004), pp. 653–662.
  • [56] B. King-Casas et al., Getting to know you: reputation and trust in a two-person economic exchange, Science 308 (2005), pp. 78–83.

Studies of learning and anticipated own monetary reward cited in Fig. 1:

  • [33] S.M. Tom et al., The neural basis of loss aversion in decision-making under risk, Science 315 (2007), pp. 515–518.
  • [61] M. Bhatt and C.F. Camerer, Self-referential thinking and equilibrium as states of mind in games: fMRI evidence, Games Econ. Behav. 52 (2005), pp. 424–459.
  • [73] P.K. Preuschoff et al., Neural differentiation of expected reward and risk in human subcortical structures, Neuron 51 (2006), pp. 381–390.
  • [74] J. O’Doherty et al., Dissociable roles of ventral and dorsal striatum in instrumental conditioning, Science 304 (2004), pp. 452–454.
  • [75] E.M. Tricomi et al., Modulation of caudate activity by action contingency, Neuron 41 (2004), pp. 281–292.