Love and Money

Marketplace has an interview with John Cassidy, who wrote a recent New Yorker article on experiments with oxytocin and trust.

Peter Sokol-Hessner, a grad student at New York University’s Center for Brain Imaging, is using functional magnetic resonance imaging (fMRI). Sokol-Hessner is studying "loss aversion," the rather irrational impulse most of us have to short-term economic loss, even when it would benefit us in the long term.

Cassidy writes,

... imagine that you and a stranger are sitting on a park bench, when an economist approaches and offers both of you ten dollars. He asks the stranger to suggest how the ten dollars should be divided, and he gives you the right to approve or reject the division. If you accept the stranger’s proposal, the money will be divided between you accordingly; if you refuse it, neither of you gets anything.

How would you react to this situation, which economists refer to as an “ultimatum game,” because one player effectively gives the other an ultimatum? Game theorists say that you should accept any positive offer you receive, even one as low as a dollar, or you will end up with nothing. But most people reject offers of less than three dollars, and some turn down anything less than five dollars.

Eventually, he relates this work to Ernst Fehr's studies of how inhaling oxytocin changed trust game players' economic decisions at the University of Zurich.

In the ultimatum game situation, inhaling oxytocin likely would cause more people to accept any positive offer. Such experiments are probably on  Sokol-Hessner's short list.

Access the Marketplace podcast here.

Comments

[Carl Caputo]

Um, your New Yorker link is broken.