Human economic and financial behavior: The serotonergic hypothesis

Recent advances in the field of neuroeconomics and behavioral finance have shed new light on the biological correlates of human economic and financial behavior. In this context, a reduced serotonergic activity has been consistently linked to an increased rate of rejection of unfair offers in the ultimatum game (UG), a simple two-person bargaining between a proposer and a responder. Besides serotonin, increased testosterone levels have been associated to rejections of unfair UG offers, as well as to higher financial gains among professional traders operating in the London stock market. Since low serotonin and high testosterone levels in the central nervous system may interact to exert significant effects on the neural mechanisms involved in the expression of impulsivity and aggressive behavior, it is feasible to hypothesize that serotonergic neurotransmission might exert an important influence on investors' choices in real-world financial markets. Future studies in this area should explore whether tryptophan depletion may actually improve (or diminish) investors' trading performance.     

The spatial ultimatum game.

In the ultimatum game, two players are asked to split a certain sum of money. The proposer has to make an offer. If the responder accepts the offer, the money will be shared accordingly. If the responder rejects the offer, both players receive nothing. The rational solution is for the proposer to offer the smallest possible share, and for the responder to accept it. Human players, in contrast, usually prefer fair splits. In this paper, we use evolutionary game theory to analyse the ultimatum game. We first show that in a non-spatial setting, natural selection chooses the unfair, rational solution. In a spatial setting, however, much fairer outcomes evolve.     

Emergent Dynamics of Fairness in the Spatial Coevolution of Proposer and Responder Species in the Ultimatum Game

While spatially local interactions are ubiquitous between coevolving species sharing recourses (e.g., plant-insect interactions), their effects on such coevolution processes of strategies involving the share of a resource are still not clearly understood. We construct a two-dimensional spatial model of the coevolution of the proposer and responder species in the ultimatum game (UG), in which a pair of proposer and responder individuals at each site plays the UG. We investigate the effects of the locality of interactions and the intensity of selection on the emergence of fairness between these species. We show that the lower intensity of selection favors fair strategies in general, and there are no significant differences in the evolution of fairness between the cases with local and global interactions when the intensity of selection is low. However, as the intensity of selection becomes higher, the spatially local interactions contribute to the evolution of fairer strategies more than the global interactions, even though fair strategies become more difficult to evolve. This positive effect of spatial interactions is expected to be due to the mutual benefit of fairness for both proposer and responder species in future generations, which brings about a dynamic evolution process of fairness.     

Local competition sparks concerns for fairness in the ultimatum game

Humans reject uneven divisions of resources, even at personal cost. This is observed in countless experiments using the ultimatum game, where a proposer offers to divide a resource with a responder who either accepts the division or rejects it (whereupon both earn zero). Researchers debate why humans evolved a psychology that is so averse to inequity within partnerships. We suggest that the scale of competition is crucial: under local competition with few competitors, individuals reject low offers, because they cannot afford to be disadvantaged relative to competitors. If one competes against the broader population (i.e. global competition), then it pays to accept low offers to increase one''s absolute pay-off. We support this intuition with an illustrative game-theoretical model. We also conducted ultimatum games where participants received prizes based on pay-offs relative to immediate partners (local competition) versus a larger group (global competition). Participants demanded higher offers under local competition, suggesting that local competition increases people''s demands for fairness and aversion to inequality.     

Digit ratio (2D:4D) moderates the impact of sexual cues on men's decisions in ultimatum games

Three experimental studies demonstrate that 'sex-related cues' impact human decision-making in ultimatum games. In the ultimatum game, two individuals divide a sum of money. The proposer offers a portion of the money to the other player, the responder. If the responder accepts the offer, the money is distributed in agreement with the proposer's offer. If the responder rejects the offer, neither player receives anything. Our studies show that exposure to pictures of sexy women or lingerie increases the likelihood of accepting unfair offers. Digit ratios of responders are reliably associated with their behaviour: males with lower digit ratios are more likely to reject an unfair split in neutral contexts, but more likely to accept unfair offers in sex-related contexts.     

Emotional expressivity as a signal of cooperation

Previous research has suggested that the spontaneous display of positive emotion may be a reliable signal of cooperative tendency in humans. Consistent with this proposition, several studies have found that self-reported cooperators indeed display higher levels of positive emotions than non-cooperators. In this study, we defined cooperators and non-cooperators in terms of their behavior as the proposer in an ultimatum game, and video-taped their facial expressions as they faced unfair offers as a responder. A detailed analysis of the facial expressions displayed by participants revealed that cooperators displayed greater amounts of emotional expressions, not limited to positive emotional expression, when responding to unfair offers in the ultimatum game. These results suggest that cooperators may be more emotionally expressive than non-cooperators. We speculate that emotional expressivity can be a more reliable signal of cooperativeness than the display of positive emotion alone.     

Exaggerated Intergroup Bias in Economical Decision Making Games: Differential Effects of Primary and Secondary Psychopathic Traits

Psychopathic personality traits are linked with selfish and non-cooperative responses during economical decision making games. However, the possibility that these responses may vary when responding to members of the in-group and the out-group has not yet been explored. We aimed to examine the effects of primary (selfish, uncaring) and secondary (impulsive, irresponsible) psychopathic personality traits on the responses of non-offending participants to the in-group and the out-group (defined in terms of affiliation to a UK University) across a series of economical decision making games. We asked a total of 60 participants to act as the proposer in both the dictator game and the ultimatum game. We found that across both tasks, those who scored highly for secondary psychopathic traits showed an elevated intergroup bias, making more generous offers toward members of the in-group relative to the out-group. An exaggerated intergroup bias may therefore represent a motivational factor for the antisocial behavior of those with elevated secondary psychopathic traits.     

High-testosterone men reject low ultimatum game offers

The ultimatum game is a simple negotiation with the interesting property that people frequently reject offers of 'free' money. These rejections contradict the standard view of economic rationality. This divergence between economic theory and human behaviour is important and has no broadly accepted cause. This study examines the relationship between ultimatum game rejections and testosterone. In a variety of species, testosterone is associated with male seeking dominance. If low ultimatum game offers are interpreted as challenges, then high-testosterone men may be more likely to reject such offers. In this experiment, men who reject low offers ($5 out of $40) have significantly higher testosterone levels than those who accept. In addition, high testosterone levels are associated with higher ultimatum game offers, but this second finding is not statistically significant.     

How conception risk affects competition and cooperation with attractive women and men

We investigated competition and cooperation for resources across the menstrual cycle in the context of bargaining games. Although bargaining has been studied within an evolutionary framework, little attention has been paid specifically to the role of mating motives in economic behavior. To investigate how motives related to reproductive success affect bargaining, participants at high or low risk for conception or who were on oral contraceptives played ultimatum and dictator games with partners who varied in sex and facial attractiveness. In ultimatum games, women in the fertile phase were more competitive over resources with attractive women than with less attractive women. Intrasexual competition was not observed in dictator games. Women were more cooperative with attractive men than with less attractive men in both games, regardless of fertility status. Low fertility women were more cooperative with attractive members than with less attractive members of both sexes in both games. Results support the view that, during periods of high fertility, when women are most intrasexually competitive for mates, withholding resources from potential rivals would enable women to gain the means to enhance their attractiveness and weaken competitors' abilities to do the same at a time when relative advantages in appearance are most crucial to reproductive success. The lack of a fertility effect for cooperation with potential mates supports the view that displays of generosity accrue benefits for women across the cycle in their efforts to attract men who will invest in relationships.     

Testosterone administration does not affect men's rejections of low ultimatum game offers or aggressive mood

Correlative evidence suggests that testosterone promotes dominance and aggression. However, causal evidence is scarce and offers mixed results. To investigate this relationship, we administered testosterone for 48 h to 41 healthy young adult men in a within-subjects, double-blind placebo-controlled balanced crossover design. Subjects played the role of responders in an ultimatum game, where rejecting a low offer is costly, but serves to destroy the proposer's profit. Such action can hence be interpreted as non-physical aggression in response to social provocation. In addition, subjects completed a self-assessed mood questionnaire. As expected, self-reported aggressiveness was a key predictor of ultimatum game rejections. However, while testosterone affected subjective ratings of feeling energetic and interested, our evidence strongly suggests that testosterone had no effect on ultimatum game rejections or on aggressive mood. Our findings illustrate the importance of using causal interventions to assess correlative evidence.     

Fluctuating asymmetry and behavior in the ultimatum game in Jamaica

The ultimatum game measures cooperative tendencies in humans under experimental conditions. One individual can split money between oneself and another, while the other has the option of accepting or rejecting the offer, with each player receiving the accepted split or nothing if the split is rejected. We studied the association of players' degree of symmetry [fluctuating asymmetry (FA)] with behavior in the ultimatum game. Symmetrical males were expected to be less cooperative and, thus, make lower offers (while being more likely to reject unfair offers). In a population of young adult Jamaicans, who are well-characterized for bodily symmetry, we found that symmetrical males made significantly lower offers than asymmetrical ones (p<.001), but found no effect on rejection rates (perhaps due to a very small sample size). No significant association of symmetry and game playing was found in women, but women with a higher body mass index made less generous offers (p<.05).     

Control in mutualisms: Combined implications of partner choice and bargaining roles

When two species form a mutualistic association, the degree of control that each has over the interaction may be pivotal in determining the relative benefit each obtains. We incorporate the capacity for partner choice into a model of mutualism based on the exchange of goods and/or services, where one guild of mutualists plays the role of proposer (proposing a price at which the goods and/or services will be exchanged) and the other plays the role of responder (accepting or rejecting the deal). We show how the payoff structure in this scenario and other closely related ones correspond to the ultimatum and demand games of economics. In the model, there are both costs and benefits to a guild whose players have control over interactions. Control over interactions in the sense of being able to exercise partner choice can benefit a guild by selecting for mutualism in its partners, but is most effective in selecting against moderately exploitative partners, and so can give highly exploitative partners an advantage. This can generate dynamics similar to taxon cycles or those seen in models with competition-colonization tradeoffs, wherein increasingly more mutualistic partners (acting as superior competitors) are selected for up to a tipping point, at which highly exploitative strategies (akin to superior colonizers) gain an advantage. Control over interactions in the sense of being able to appropriate ‘surplus’ payoffs in each interaction, which is selected for within-guild and is equivalent to playing the role of responders, selects against high demands (and so for mutualism) in the guild with control. Combining the two mechanisms, a high degree of mutualism in both guilds and coexistence of more mutualistic and more exploitative strategies within each are both consistent with control over the interaction being highly skewed toward one side that does what is in its own short-term interests.     

Fairness evolution in the ultimatum game is a function of reward size

I formulate a simple model of the ultimatum game, in which a proposer and a responder can receive a reward if they agree on how to divide this reward between them. The model is easy to analyse and shows that strong tendencies to fair division are expected when evolution of strategy frequencies follow the traditional gradient dynamics assumed in evolutionary models. The mean stable offer is typically around 20-40% although this depends on the maximum payoff and if rejection thresholds can evolve independently from proposals. The stable proportion offered at evolutionary equilibrium increases with the maximum payoff, if proposal and acceptance thresholds are dictated by the same strategy and cannot evolve independently. If proposal and acceptance evolve independently, the stable proportion instead decreases with the maximum payoff. The stable outcome may also show substantial variation.     

Kinship,Family, and Gender Effects in the Ultimatum Game

Kinship and reciprocity are two main predictors of altruism. The ultimatum game has been used to study altruism in many small-scale societies. We used the ultimatum game to examine effects of individuals’ family and kin relations on altruistic behavior in a kin-based horticultural community in rural Dominica. Results show sex-specific effects of kin on ultimatum game play. Average coefficient of relatedness to the village was negatively associated with women’s ultimatum game proposals and had little effect on men’s proposals. Number of brothers in the village was positively associated with men’s ultimatum game proposals and negatively associated with women’s proposals. Similarly, presence of father in the village was associated with higher proposals by men and lower proposals by women. We interpret the effect of brothers on men’s proposals as a consequence of local competition among brothers. We speculate that daughter-biased parental care in this community creates a sense of entitlement among women with brothers, which may explain the inverse relation between number of brothers and women’s ultimatum game proposals. The pattern of results may be consistent with how matrifocality affects cultural models of fairness differently along gender and family lines.     

Influences of State and Trait Affect on Behavior,Feedback-Related Negativity,and P3b in the Ultimatum Game

The present study investigates how different emotions can alter social bargaining behavior. An important paradigm to study social bargaining is the Ultimatum Game. There, a proposer gets a pot of money and has to offer part of it to a responder. If the responder accepts, both players get the money as proposed by the proposer. If he rejects, none of the players gets anything. Rational choice models would predict that responders accept all offers above 0. However, evidence shows that responders typically reject a large proportion of all unfair offers. We analyzed participants’ behavior when they played the Ultimatum Game as responders and simultaneously collected electroencephalogram data in order to quantify the feedback-related negativity and P3b components. We induced state affect (momentarily emotions unrelated to the task) via short movie clips and measured trait affect (longer-lasting emotional dispositions) via questionnaires. State happiness led to increased acceptance rates of very unfair offers. Regarding neurophysiology, we found that unfair offers elicited larger feedback-related negativity amplitudes than fair offers. Additionally, an interaction of state and trait affect occurred: high trait negative affect (subsuming a variety of aversive mood states) led to increased feedback-related negativity amplitudes when participants were in an angry mood, but not if they currently experienced fear or happiness. We discuss that increased rumination might be responsible for this result, which might not occur, however, when people experience happiness or fear. Apart from that, we found that fair offers elicited larger P3b components than unfair offers, which might reflect increased pleasure in response to fair offers. Moreover, high trait negative affect was associated with decreased P3b amplitudes, potentially reflecting decreased motivation to engage in activities. We discuss implications of our results in the light of theories and research on depression and anxiety.     

Dopamine D4 receptor gene associated with fairness preference in ultimatum game

In experimental economics, the preference for reciprocal fairness has been observed in the controlled and incentivized laboratory setting of the ultimatum game, in which two individuals decide on how to divide a sum of money, with one proposing the share while the second deciding whether to accept. Should the proposal be accepted, the amount is divided accordingly. Otherwise, both would receive no money. A recent twin study has shown that fairness preference inferred from responder behavior is heritable, yet its neurogenetic basis remains unknown. The D4 receptor (DRD4) exon3 is a well-characterized functional polymorphism, which is known to be associated with attention deficit hyperactivity disorder and personality traits including novelty seeking and self-report altruism. Applying a neurogenetic approach, we find that DRD4 is significantly associated with fairness preference. Additionally, the interaction among this gene, season of birth, and gender is highly significant. This is the first result to link preference for reciprocal fairness to a specific gene and suggests that gene × environment interactions contribute to economic decision making.     

Real-time detection of workload changes using heart rate variability

This work presents a novel approach to detecting real-time changes in workload using heart rate variability (HRV). We propose that for a given workload state, the values of HRV vary in a sub-range of a Gaussian distribution. We describe methods to monitor a HRV signal in real-time for change points based upon sub-Gaussian fitting. We tested our method on subjects sitting at a computer performing a low workload surveillance task and a high workload video game task. The proposed algorithm showed superior performance compared to the classic CUSUM method for detecting task changes.     

Theft in an ultimatum game: chimpanzees and bonobos are insensitive to unfairness

Humans, but not chimpanzees, punish unfair offers in ultimatum games, suggesting that fairness concerns evolved sometime after the split between the lineages that gave rise to Homo and Pan. However, nothing is known about fairness concerns in the other Pan species, bonobos. Furthermore, apes do not typically offer food to others, but they do react against theft. We presented a novel game, the ultimatum theft game, to both of our closest living relatives. Bonobos and chimpanzee ‘proposers’ consistently stole food from the responders'' portions, but the responders did not reject any non-zero offer. These results support the interpretation that the human sense of fairness is a derived trait.     

Does Competition Really Bring Out the Worst? Testosterone,Social Distance and Inter-Male Competition Shape Parochial Altruism in Human Males

Parochial altruism, defined as increased ingroup favoritism and heightened outgroup hostility, is a widespread feature of human societies that affects altruistic cooperation and punishment behavior, particularly in intergroup conflicts. Humans tend to protect fellow group members and fight against outsiders, even at substantial costs for themselves. Testosterone modulates responses to competition and social threat, but its exact role in the context of parochial altruism remains controversial. Here, we investigated how testosterone influences altruistic punishment tendencies in the presence of an intergroup competition. Fifty male soccer fans played an ultimatum game (UG), in which they faced anonymous proposers that could either be a fan of the same soccer team (ingroup) or were fans of other teams (outgroups) that differed in the degree of social distance and enmity to the ingroup. The UG was played in two contexts with varying degrees of intergroup rivalry. Our data show that unfair offers were rejected more frequently than fair proposals and the frequency of altruistic punishment increased with increasing social distance to the outgroups. Adding an intergroup competition led to a further escalation of outgroup hostility and reduced punishment of unfair ingroup members. High testosterone levels were associated with a relatively increased ingroup favoritism and also a change towards enhanced outgroup hostility in the intergroup competition. High testosterone concentrations further predicted increased proposer generosity in interactions with the ingroup. Altogether, a significant relation between testosterone and parochial altruism could be demonstrated, but only in the presence of an intergroup competition. In human males, testosterone may promote group coherence in the face of external threat, even against the urge to selfishly maximize personal reward. In that way, our observation refutes the view that testosterone generally promotes antisocial behaviors and aggressive responses, but underlines its rather specific role in the fine-tuning of male social cognition.     

Predicting decisions in human social interactions using real-time fMRI and pattern classification

Negotiation and trade typically require a mutual interaction while simultaneously resting in uncertainty which decision the partner ultimately will make at the end of the process. Assessing already during the negotiation in which direction one's counterpart tends would provide a tremendous advantage. Recently, neuroimaging techniques combined with multivariate pattern classification of the acquired data have made it possible to discriminate subjective states of mind on the basis of their neuronal activation signature. However, to enable an online-assessment of the participant's mind state both approaches need to be extended to a real-time technique. By combining real-time functional magnetic resonance imaging (fMRI) and online pattern classification techniques, we show that it is possible to predict human behavior during social interaction before the interacting partner communicates a specific decision. Average accuracy reached approximately 70% when we predicted online the decisions of volunteers playing the ultimatum game, a well-known paradigm in economic game theory. Our results demonstrate the successful online analysis of complex emotional and cognitive states using real-time fMRI, which will enable a major breakthrough for social fMRI by providing information about mental states of partners already during the mutual interaction. Interestingly, an additional whole brain classification across subjects confirmed the online results: anterior insula, ventral striatum, and lateral orbitofrontal cortex, known to act in emotional self-regulation and reward processing for adjustment of behavior, appeared to be strong determinants of later overt behavior in the ultimatum game. Using whole brain classification we were also able to discriminate between brain processes related to subjective emotional and motivational states and brain processes related to the evaluation of objective financial incentives.