Describe the rules of the ultimatum game. How is it useful to study economic rationality?

Two anonymous players. 1st player divides a sum of money.2nd player can accept or reject this proposal.

- If he/she rejects, neither player receives anything

- If he/she accepts, the money is split according to the proposal

Game is played only once, and anonymously - reciprocation is not an issue.

But in real life people react irrationally. Many people reject low offers (less than 20%) in the game, even if stake levels are as high as a 3 months’ income.

Т.е. игрок 1 ставит ультиматум, игрок 2 соглашается или нет. Экономически согласиться всегда рациональнее, т.к. получить что-то, лучше, чем 0. Но психологически люди реагируют на нечестное отношение.

Области мозга, задействованные здесь – это DLPFC (self-control, system 2) и Anterior insula(emotions, system 1, encodes body emotional responces) The more insula coretex is activates related to DLPFC the more propability of rejection of unfair offer.

Summary

The brain areas showing greatest activation for unfair offers:

• anterior insula (an area involved in negative emotions and disgust)

• dorsolateral prefrontal cortex (DLPFC, an area involved in cognitive self-control)

• cingulate cortex (an area involved in conflictmonitoring).

Study: people playing ultimatum game are scanned in fMRI. DLPFC involved in self-control based on social norms. If this region is stimulated people start to accept unfair offers. Moreover, people consciously they keep find it offers unfair, but accept them.

Describe the idea of mirror neurons

A mirror neuron is a neuron that fires both when an animal acts and when the animal observes the same action performed by another.[1][2][3] Thus, the neuron "mirrors" the behavior of the other, as though the observer were itself acting. Such neurons have been directly observed in primate species.[4] Birds have been shown to have imitative resonance behaviors and neurological evidence suggests the presence of some form of mirroring system.[4][5] In humans, brain activity consistent with that of mirror neurons has been found in the premotor cortex, the supplementary motor area, the primary somatosensory cortex and the inferior parietal cortex.[6] The function of the mirror system is a subject of much speculation. Many researchers in cognitive neuroscience and cognitive psychology consider that this system provides the physiological mechanism for the perception/action coupling (see the common coding theory).[3] They argue that mirror neurons may be important for understanding the actions of other people, and for learning new skills by imitation. Some researchers also speculate that mirror systems may simulate observed actions, and thus contribute to theory of mind skills, while others relate mirror neurons to language abilities.In addition, mirror neurons are the neural basis of the human capacity for emotions such as empathy. EXPERIMENT (OR HOW IT WAS DISCOVERED): In the 1980s and 1990s, Giacomo Rizzolatti was working with Giuseppe Di Pellegrino, Luciano Fadiga, Leonardo Fogassi, and Vittorio Gallese at the University of Parma, Italy. These neurophysiologists had placed electrodes in the ventral premotor cortex of the macaque monkey to study neurons specialized for the control of hand and mouth actions; for example, taking hold of an object and manipulating it. During each experiment the researchers allowed the monkey to reach for pieces of food and recorded from a single neuron in the monkey's brain, thus measuring the neuron's response to certain movements.[17][18] They found that some of the neurons they recorded from would respond when the monkey saw a person pick up a piece of food as well as when the monkey picked up the food. The discovery was initially sent to Nature but was rejected for its "lack of general interest". A few years later, the same group published another empirical paper, discussing the role of the mirror-neuron system in action recognition, and proposing that the human Broca’s region was the homologue region of the monkey ventral premotor cortex.[20] While these papers reported the presence of mirror neurons responding to hand actions, a subsequent study by Pier Francesco Ferrari and colleagues[21] described the presence of mirror neurons responding to mouth actions and facial gestures.

Mirror neurons &empathy

In actual fact, our mirror neurons, also called empathy neurons (V. Ramachandran), fire when we experience an emotion and similarly when we see others experiencing an emotion, such as happiness, fear, anger, or sadness. When we see someone in pain, for example, our mirror neurons fire instantaneously. In other words, we don’t need to think about the other person being in pain, we actually experience it firsthand.

Mirror mechanisms of processing of emotional information (insular cortex is activated both by experienced and perceived disgust). Insular cortex: disgust, pain, risk-avoidance.

Insular cortex connects to decision-making networks: OFC, nucleus accumbens, anterior cingulate, dorsolateral prefrontal cortex and other prefrontal areas.