Neuroeconomics and Social Decision-Making

The latest issue of Science has a special section devoted to decision-making. Alan Sanfey, best known for his influential study of the Ultimatum Game, has written a thorough review (available for free) about recent progress in the field. The takeaway lesson is that the experimental methods of neuroeconomics (Game Theory plus fMRI with a dash of electrophysiology) can help us better understand the neural source of our social decisions:

A common criticism of economic models is that observed decision behavior typically deviates, often quite substantially, from the models' predictions. Most classical game theoretical analyses predict that rational, self-interested players will make decisions to reach outcomes, known as Nash equilibria, from which no player can increase his or her own payoff unilaterally. However, players rarely play according to these strategies for a useful summary of the primary findings in this field. In reality, decision-makers are generally less selfish and strategic than the model predicts and value social factors such as reciprocity and equity. Nonetheless, the well-characterized tasks and formal modeling approach offered by Game Theory provides a useful foundation for the study of decisions in a social context. Although the rules of these games are typically simple, these tasks produce a surprisingly varied and rich pattern of decision-making.

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As part of the neuroeconomic approach, researchers have begun to investigate the psychological and neural correlates of social decisions using tasks derived from a branch of experimental economics known as Game Theory. These tasks, though beguilingly simple, require sophisticated reasoning about the motivations of other players. Recent research has combined these paradigms with a variety of neuroscientific methods in an effort to gain a more detailed picture of social decision-making. The benefits of this approach are twofold. First, neuroscience can describe important biological constraints on the processes involved, and indeed, research is revealing that many of the processes underlying complex decision-making may overlap with more fundamental brain mechanisms. Second, actual decision behavior in these tasks often does not conform to the predictions of Game Theory, and therefore, more precise characterizations of behavior will be important in adapting these models to better fit how decisions are actually made.