Neuroeconomics

Trust Building in the Brain

The following article just came out in Science.  Brooks King-Casas, Damon Tomlin, Cedric Anen, Colin F. Camerer, Steven R. Quartz, P. Read Montague, “Getting to Know You: Reputation and Trust in a Two-Person Economic Exchange,” SCIENCE, 308, 2005, pp. 78-83.  This is a really interesting paper which shows the power of Read Montagues efforts to put together a hyperscanning community.  The paper implements a scanner friendly version of the Berg et. al., "Investment/Trust Game", so as to simultaneously scan both subjects acting as trustor and trustee. 

One of their main findings is that the head of the caudate nucleus is active as the trustee learns to reciprocate with the trustor.  At first this activation is observed at the time decisions are revealed, but later on the activation shifts forward in time in anticipation of receiving trust from another. 

The same phenomena is observed in reward processing areas of the brain associated with dopamine neurons such as the nucleus accumbens, which has been hypothesized, see the review by McClure et. al., to be a form of error-prediction learning in the brain.  This suggests that at first people closely monitor each other and use costly brain resources to invoke a "theory-of-mind" model of each others intentions, as seen in the earlier work by McCabe et. al.   But over time the brain economizes on scarce resources by coding an anticipatory response to the trust arrangement.

Trust Games

To trust someone implies taking some risk. To be trustworthy implies that you will try to reduce risks to those who trust you even if it is costly to you to do so. For economists trust reduces the transaction cost of trading. In,

Berg, Joyce, John Dickhaut, and Kevin McCabe, "Trust, Reciprocity, and Social History," Games and Economic Behavior, (10)1995, pp. 122-142,

We designed an experiment to study individuals' propensity to be trusting and to be trustworthy in a task we call the investment game. In this game two subjects are each given $10 as a show up fee. One of the subjects is told that he or she will be decision maker one (DM1), and can send any amount (all, none, or some) of the $10 to the other subject (decision maker two, DM2). The rules are simple. Every dollar sent will be tripled by the experimenter before it reaches DM2, who then gets to decide how much of the tripled money to keep and how much to send back to DM1. After DM2’s decision the game is over and subjects leave. We designed the experiment so it was double-blind meaning that neither the subjects, nor the experimenter, new who was matched together, or what subject made what decision. Game theory predicts that as long as DM2 prefers more money to less, DM2 should keep all the money that is sent. Of course, DM1 should then send nothing. But this is now what happened. On average DM1’s send over $5 and roughly one third of the DM2’s reciprocated by sending back more than was originally sent even though the double-blind condition implied no one would know what DM2 really did.