Cognitive Control and Individual Differences in Economic Ultimatum Decision-Making

Much publicity has been given to the fact that people's economic decisions often deviate from the rational predictions of standard economic models. In the classic ultimatum game, for example, most people turn down financial gains by rejecting unequal monetary splits. The present study points to neglected individual differences in this debate. After participants played the ultimatum game we tested for individual differences in cognitive control capacity of the most and least economic responders. The key finding was that people who were higher in cognitive control, as measured by behavioral (Go/No-Go performance) and neural (No-Go N2 amplitude) markers, did tend to behave more in line with the standard models and showed increased acceptance of unequal splits. Hence, the cognitively highest scoring decision-makers were more likely to maximize their monetary payoffs and adhere to the standard economic predictions. Findings question popular claims with respect to the rejection of standard economic models and the irrationality of human economic decision-making

Motives and comprehension in a public goods game with induced emotions

This study analyses the sensitivity of public goods contributions through the lens of psychological motives. We report the results of a public goods experiment in which subjects were induced with the motives of care and anger through autobiographical recall. Subjects' preferences, beliefs, and perceptions under each motive are compared with those of subjects experiencing a neutral autobiographical recall control condition. We find, but only for those subjects with the highest comprehension of the game, that care elicits significantly higher contributions than anger, with the control treatment in between. This positive influence of the care motive on unconditional giving is accounted for partly by preferences for giving and partly by the beliefs concerning greater contributions by others. Anger also affects attention to own and other's payoffs (using mouse tracking) and perceptions of the game's incentive structure (cooperative or competitive)

Negotiating in the United States and Hong Kong

We propose that cultural values (self-enhancement, self-trans-cendence, conservatism, and openness to change) provide a social environment where some negotiation strategies are selected to survive over others. These selected negotiation strategies become normative. Results from a negotiation simulation in the United States and Hong Kong indicate that U.S. negotiators are more likely to subscribe to self-interest and joint problem solving norms, and Hong Kong Chinese negotiators are more likely to subscribe to an equality norm. Further, U.S. negotiators report more satisfaction when they maximize joint gain and Hong Kong Chinese negotiators are happier when they achieve outcome parity. The reported norms and outcome evaluations are consistent with the value profiles of the two cultures. The implications of these cultural differences are discussed in terms of expanding U.S, based negotiation theory

Unfairness, anger, and spite: Emotional rejections of ultimatum offers

This paper addresses an anomaly in experimental economics, the rejection of ultimatum offers, and uses a psychological explanation for this essentially economic event, The wounded pride/spite model predicts that informed, knowledgeable respondents may react to small ultimatum offers by perceiving them as unfair, feeling anger; and acting spitefully. Results of a large scale experiment support the model, showing that rejections were most frequent when respondents could evaluate the fairness of their offers and attribute responsibility to offerers. In addition, anger was a better explanation of the rejections than perceptions that the offers were unfair. The discussion addresses the rarely studied but frequently observed emotions that negotiations provoke. (C) 1996 Academic Press

Social norms and cooperation in social dilemmas: The effects of context and feedback

Drawing from research on social norms, we proposed and tested the hypothesis that people behave more competitively in social dilemmas involving economic decisions compared to those involving noneconomic decisions. We also proposed that people would compete more if they see that others have unexpectedly competed in a prior situation and cooperate more when others have unexpectedly cooperated in a previous situation. Further, we hypothesized that if others behave consistently with expectations, such behaviors (either cooperative or competitive) would not affect subsequent behavior. One hundred ninety-five undergraduate students participated in an experiment in which they made choices in two different social dilemma flames Results support the hypotheses, and the discussion addresses the implications of the study for research on social norms and decision making. (C) 1999 Academic Press

A formal model of trust based on outcomes

The study of trust has occupied scholars from a number of disciplines, who have made limited attempts at integrating the different streams. One reason for lack of integration is that no clear definition of trust exists. In this article we grapple with this issue by going back to first principles to derive a: mathematically precise and statistically rigorous definition of trust. In giving a: rigorous meaning of trust, we also capture the key elements of the concept as highlighted by various disciplinary lenses. Our definition of trust, although rationally based, is consistent with many of the findings of earlier behavioral and sociological research. Its contribution is in adding precision and richness to our understanding of how trust is created and maintained in various social and economic interactions