Studies in Neuroscience, Psychology and Behavioral Economics Martin Reuter Christian Montag Editors Neuroeconomics Editors Martin Reuter Christian Montag Differentielle and Biologische Psychologie Department of Molecular Psychology, Rheinische Friedrich-Wilhelms-Universität Institute for Psychology and Education Bonn Ulm University Bonn Ulm Germany Germany and Key Laboratory for NeuroInformation, School of Life Science and Technology, Center for Information in Medicine University of Electronic Science and Technology of China Chengdu People’s Republic of China ISSN 2196-6605 ISSN 2196-6613 (electronic) Studies in Neuroscience, Psychology and Behavioral Economics ISBN 978-3-642-35922-4 ISBN 978-3-642-35923-1 (eBook) DOI 10.1007/978-3-642-35923-1 Library of Congress Control Number: 2016948772 © Springer-Verlag Berlin Heidelberg 2016 This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. Printed on acid-free paper This Springer imprint is published by Springer Nature The registered company is Springer-Verlag GmbH Germany The registered company address is: Heidelberger Platz 3, 14197 Berlin, Germany [email protected] Contents 1 Neuroeconomics—An Introduction .......................... 1 Martin Reuter and Christian Montag Part I Games in Experimental Economics 2 Game Theory in Neuroeconomics ........................... 13 Claudia Civai and Daniel R. Hawes Part II Molecular Basis of Human Decision Making 3 Hormones and Economic Decisions .......................... 41 Amos Nadler and Paul J. Zak 4 Genes and Human Decision-Making ......................... 67 Martin Reuter and Christian Montag 5 Monoamines and Decision-Making Under Risks................ 85 Hidehiko Takahashi Part III Environmental/Situational Factors Influencing Human Decision Making 6 Decision-Making Under Uncertainty ......................... 99 Dominik R. Bach 7 Emotion Regulation and Economic Decision-Making ............ 113 Renata M. Heilman, Andrei C. Miu and Daniel Houser 8 How the Experience of Time Shapes Decision-Making........... 133 Marc Wittmann and Martin P. Paulus 9 Framing Effects: Behavioral Dynamics and Neural Basis ........ 145 Xiao-Tian Wang, Lilin Rao and Hongming Zheng ix [email protected] x Contents 10 The Influence of Costs, Benefits and Their Interaction on the Economic Behaviour of Consumers .................... 167 Luca Panzone and Deborah Talmi Part IV Decision Making in Social Contexts 11 Individual Differences in Decision-Making: A Neural Trait Approach to Study Sources of Behavioral Heterogeneity ......... 191 Kyle Nash and Daria Knoch 12 Altruistic Punishment ..................................... 211 Alexander Strobel Part V Translational and Developmental Approaches to Neuroeconomics 13 Brain SEEKING Circuitry in Neuroeconomics: A Unifying Hypothesis for the Role of Dopamine-Energized Arousal of the Medial Forebrain Bundle in Enthusiasm-Guiding Decision-Making ......................................... 231 Jaak Panksepp and Cristina G. Wilson 14 The Psychology and Psychobiology of Simple Decisions: Speeded Choice and Its Neural Correlates .................... 253 David K. Sewell and Philip L. Smith 15 A Neurocognitive Perspective on the Development of Social Decision-Making.................................. 293 Geert-Jan Will and Berna Güroğlu 16 Neuroeconomic Approaches in Mental Disorders ............... 311 S. Lis and P. Kirsch Part VI Applied Neuroeconomics 17 Consumer Neuroscience and Neuromarketing ................. 333 Bernd Weber Part VII Neuroscience Methods in Neuroeconomics 18 Skin Conductance Measures in Neuroeconomic Research ........ 345 Dominik R. Bach 19 Electroencephalography: Current Trends and Future Directions ..................................... 359 Stefan Debener, Cornelia Kranczioch and Maarten De Vos 20 Functional Magnetic Resonance Imaging (fMRI) ............... 375 Sebastian Markett [email protected] Contents xi 21 Structural MRI: Morphometry ............................. 399 Christian Gaser 22 Diffusion Tensor Imaging (DTI) and Tractography ............. 411 Theodor Rüber, Christian Erich Elger and Bernd Weber 23 Molecular Genetics ....................................... 443 Martin Reuter, Andrea Felten and Christian Montag 24 Hormones............................................... 463 Robert Miller and Clemens Kirschbaum 25 Eye Movements .......................................... 481 Ulrich Ettinger and Christoph Klein Appendix A: Neuroanatomy.................................... 503 [email protected] 146 X.-T. Wang et al. 9.1 Behavioral Studies of Framing Effects 9.1.1 Framing and Framing Effects: Definition and Typology Since the seminal work by Kahneman and Tversky (1979), Tversky and Kahneman (1981), framing effects have been widely studied by researchers from across the social sciences for over 30 years. Research on framing effects has been one of few multidisciplinary endeavors joined by psychologists, economists, political scien- tists, and management and marketing researchers. Framing effects epitomize the power of linguistic subtlety in regulating decision-making, oftentimes without awareness of the decision-maker. Different ways of framing, phrasing or presenting virtually identical choice options systematically affect risk preference, evaluation of experience, products or job candidates, and persuasiveness of arguments in nego- tiation and communication. A meta-analysis has shown that among some primary predictors of risky choice, framing condition was the top predictor (partial r = 0.44) followed by the value of risky payoff (partial r = 0.14), and type of good at stake (partial r = 0.13) while gain or loss condition and probability of payoff were not significant in predicting choice preference (Kühberger et al. 1999, p. 213). Tversky and Kahneman (1981) used the term ‘decision frame’ broadly to refer to “the decision-maker’s conception of the acts, outcomes, and contingencies asso- ciated with a particular choice” (p. 453). Later definitions of framing effects, despite the differences in their connotations and coverage, pinpoint two typical features: equivalency in choice outcomes and opposing valences in presentations of the choice outcomes. That is, framing effects occur when frames that cast “the same critical information in either a positive or a negative light” cause individuals to have different choice preferences (Chong and Druckman 2007; Druckman 2001; Levin et al. 1998, p. 150). Consider the well-known Asian disease problem demonstrated first by Tversky and Kahneman (1981). In the cover story of the problem, the respondents were asked to imagine that “the US is preparing for the outbreak of an unusual Asian disease, which is expected to kill 600 people. Two alternative programs to combat the disease have been proposed.” The outcomes of the disease-combating plans were then framed (phrased) differently. In the positive frame the respondents were told: “If Plan A is adopted, 200 people will be saved. If Plan B is adopted, there is a one-third probability that all 600 people will be saved, and two-thirds probability that none of them will be saved.” Given a binary choice between the two alternative plans, the majority of the respondents (72 %) were risk averse, preferring the sure option (Plan A) over its gamble equivalent (Plan B). However, when the same outcomes were ‘negatively framed’ in terms of lives lost (“If Plan A is adopted, 400 people will die. If Plan B is adopted, there is a one-third probability that none of them will die, and two-thirds probability that all 600 people will die.”), the majority of the respondents (78 %) were risk-taking, preferring the gamble option (Plan B) over its sure-thing equivalent. This classic framing effect has been reliably [email protected] 9 Framing Effects: Behavioral Dynamics and Neural Basis 147 replicated with different samples and across cultures and disciplines (e.g., see Kühberger 1998;Kühberger et al. 1999). Such risk preference reversal due to valence framing of virtually equivalent choice outcomes raises radical doubts about basic assumptions in economic theories of rationality. How can decision agents make consistent and rational choices when empirical evidence of choice preference appears to be so malleable, so vulnerable to framing effects? The classic framing effect is thus viewed as an irrational decision bias and a cognitive illusion because it violates the invariance axiom of expected utility theory, which requires a rational decision-maker