Friday, 18 October 2013

Neuro-Economics and Cooperation

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By Michael Towsey:
"Neuro-economics is the study of the neuro-physiological underpinnings of economic decision making. The field is new and providing unexpected insights into human economic behavior. Classical economic theory requires individuals to make complex calculations to maximize their personal advantage or utility. Utility, however, is a strangely ambiguous concept. On the one hand it is given a numerical value which implies the counting of something but on the other it is entirely abstract and not anchored to anything in the real world that can be counted. The advent of neurophysiology led to the idea that utility was really a surrogate for some chemical currency inside the brain, with most interest focused on serotonin molecules because these are known to be responsible for the experience of pleasure.

It turns out that a wide range of molecules of emotion[iii] impinge on the mental cost-benefit calculations that are supposed to take place inside the brain and they have unexpected effects. For example, in a ‘sharing experiment', person A was asked to share a sum of money with person B. These experiments demonstrated behavior inconsistent with neoclassical theory. People appear to put a high value on fairness. In a follow up experiment, persons A and B were placed in the same experimental scenario as before, but they were (unknowingly) given an intranasal administration of oxytocin. Oxytocin is a neuropeptide that plays a key role in social attachment and affiliation in animals and causes a substantial increase in trust in humans. In these experiments the effect of oxytocin was to increase the amount of money that A gives B. The experimenters concluded that "oxytocin may be part of the human physiology that motivates cooperation."[iv] It is worth adding that such hormone-mediated interactions are not confined to human relationships but are also likely to be involved in human-animal relationships.[v]

Oxytocin is not the only neurochemical to promote cooperation. Recent observations of bonobo monkeys in the jungles of the Congo reveal fascinating contrasts with chimpanzees.[vi] Bonobos are matriarchal and show little aggression compared to the patriarchal chimps. Chimps respond to strangers with aggression, while bonobos demonstrate curiosity. When under stress, chimp tribes degenerate into fighting while bonobos respond to stress by engaging in collective sexual activity. Scientists have concluded that bonobos demonstrate higher levels of trust both with each other and with strangers. Of most interest, however, from a neuro-economics point of view, is the ability of the monkeys to perform a simple task requiring cooperation in retrieving some bananas that are out of reach. Although both species are intelligent enough to work out a solution (for example, by one climbing on the shoulders of the other or by one holding a ladder for the other), the chimps fail because they cannot trust one another. On the other hand, bonobos have no trouble cooperating to retrieve the bananas.[vii]

It turns out that these differences can largely be correlated with a single gene - a so-called ‘social gene' that acts via a neuropeptide called vasopressin. Bonobo monkeys have the social gene, chimpanzees do not. And of particular interest - humans have the same vasopressin gene as bonobos. Social capital can be defined in terms of trust and empathy and these behavioral traits oil the wheels of social and economic interaction by encouraging cooperation between strangers. We now know that oxytocin and vasopressin are the physiological underpinnings of trust and that they influence levels of cooperation." (


[iii] This is the catchy title of a book by Candace Pert, Molecules of Emotion: The science behind mind-body medicine, pub Scribner, ISBN 0-684-84634-9, 1997.

[iv] Zak, Paul, R. Kurzban and W. Matzner. The Neurobiology of Trust. Annals of the New York Acadamy of Sciences, 2004, 1032: pp224-227. See also URL2 < <> >.

[v] Douglas, Catherine (2009) Cows with names produce more milk. Newcastle University, England. This study revealed that cows given personal names yield significantly more milk than cows identified just by numbers.

[vi] Newby, Jonica. Making love not war. Catalyst, ABC TV, 20th Sept 2007. <>

[vii] The reader may ask if experiments with monkeys have any relevance to human social behaviour because our social conditioning can sublimate or repress physiological tendencies. But this is exactly the point. It is difficult in humans to know the extent to which subtle and altruistic behaviour is ‘natural' because our social conditioning is so pervasive. Monkey experiments point to the natural physiological foundations of human behaviour presumably without the same degree of social conditioning. But there is an extremely important caveat. The information so obtained must be extrapolated to humans with much caution. A large body of experimental work on the ‘economic' behaviour of chimpanzees turns out not to be so relevant to humans because chimps lack the all important ‘trust' gene (producing vasopressin). On the other hand, comparisons between chimps and bonobos appear to tell us a lot."

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