Nice little article introducing neuro-economics
 

I started talking about this last week and just saw this popular media article:

Linky

Re: Nice little article introducing neuro-economics
 

Declining in the ultimatum game may not be as irrational as the article suggests. In the short run, it is clearly -EV, however if you were to play an iterated version, punishing small offers would certainly be necessary to maximize one's expected value. Considering that we seem to have evolved mechanisms for reciprocation in the prisoner's dilemma, this seems like an extension of that; however, when viewed in a single iteration (which is unnatural and uncommon for us, considering that the social circumstances where we would apply such behavior are almost never singular), it appears irrational.

As always, great article, please post more [img]/images/graemlins/smile.gif[/img]

Re: Nice little article introducing neuro-economics
 

Pure nonsense masquerading as science. They take very broad results and making ridiculously specific claims which are not supported by the evidence. This is very common in psychology and neurology.

As for people rejecting free money, it has more to do with avoiding the emotional and social obligations it imposes than brain wiring for game theory.

Re: Nice little article introducing neuro-economics
 

Absolutely.
The most interesting aspects of it for me (I haven't found many writings available to the public) are some of the examples where decisions made are actually suboptimal b/c of the difference between our current environment and the environment they evolved in. I saw a great talk on this a couple of months ago, so I'll try and find something rather than mangle my way through it.

Re: Nice little article introducing neuro-economics
 

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As for people rejecting free money, it has more to do with avoiding the emotional and social obligations it imposes than brain wiring for game theory.

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As for sex, it has more to do with feeling the orgasmic pleasure of getting laid than brain wiring for reproduction and survival.

Re: Nice little article introducing neuro-economics
 

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Pure nonsense masquerading as science. They take very broad results and making ridiculously specific claims which are not supported by the evidence. This is very common in psychology and neurology.

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You got all that from the article in the newspaper?
Do you ever look more in depth before you say things like this? (based on our earlier debates on race and IQ, I'd say no)

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As for people rejecting free money, it has more to do with avoiding the emotional and social obligations it imposes than brain wiring for game theory.

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And you're sure of this because...

Re: Nice little article introducing neuro-economics
 

[ QUOTE ]
[ QUOTE ]

As for people rejecting free money, it has more to do with avoiding the emotional and social obligations it imposes than brain wiring for game theory.

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As for sex, it has more to do with feeling the orgasmic pleasure of getting laid than brain wiring for reproduction and survival.

[/ QUOTE ]

NFH

Re: Nice little article introducing neuro-economics
 

Good article. It looks to be a major blow to the "more is always better than less" assumption that AC theory is based on. I don't see why it's irrational to reject the smaller offers, though, as the authors seem to be claiming.

Re: Nice little article introducing neuro-economics
 

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I don't see why it's irrational to reject the smaller offers, though, as the authors seem to be claiming.

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It's a one-time situation with a stranger, declining any offer is a loss with no downstream benefits.
If this was a situation in our social group (and extended) where it would influence later actions and treatment then declining has implied gains.
Declining in this case has our mind confusing the actual situation with our normal situation and is irrational. ??

luckyme

Re: Nice little article introducing neuro-economics
 

Hijack time.

Rduke:

How, in your opinion, should this discovery be applied? [img]/images/graemlins/smile.gif[/img]

Re: Nice little article introducing neuro-economics
 

[ QUOTE ]
[ QUOTE ]
Pure nonsense masquerading as science. They take very broad results and making ridiculously specific claims which are not supported by the evidence. This is very common in psychology and neurology.

[/ QUOTE ]

You got all that from the article in the newspaper?
Do you ever look more in depth before you say things like this? (based on our earlier debates on race and IQ, I'd say no)

[/ QUOTE ]

You know, you've been little but a troll in those discussions. Go and reread them. Your contribution was repeated assertions with vague references to decade old debates, you rarely discussed specifics or tackled any of the points I made. You're the perfect example of someone in an intellectual ivory tower. I know, based on our earlier debates, that you won't understand a word of that.

Back on topic...what exactly have researchers found that's news? I haven't read the original research, and frankly I don't care to. The lack of meat in the article says it all. This is my summary of the research findings:

- When the researchers change the functioning of a part of a person's brain that may be involved in decision making, they made a decision that coincided more strongly with their rational self interest (according to the researcher's definition of rational self interest). That's the only data point I can see here. What a truly shocking discovery. They then go on to speculate wildly about all manner of things, based on this single data point.

From what I can see, the only reasonable statements that can be made from this "discovery" are:

1. There are parts of the brain involved in decision making
2. People can make more or less emotionally based decisions when these parts are subject to stress.

Everything else is non evidence based speculation on things that have been known for decades. If I've left anything out, please state exactly what else you think this discovery proves or indicates.

[ QUOTE ]
As for people rejecting free money, it has more to do with avoiding the emotional and social obligations it imposes than brain wiring for game theory.

"And you're sure of this because..."

[/ QUOTE ]
Just an observation. There is more to self interest than just economic self interest, a fact which they downplay early on but give a nod to later in the article (completely undermining the false dichotomy they'd set up in the first place in order to frame the useless research).

Below is an example of the crap that fills areas such as neuro economics. This is not science, nor does it offer any insight. It's nothing more than highly unsophisticated speculation, and it should be discouraged instead of celebrated.

[ QUOTE ]
Why might the brain want to overrule self-interest in the first place? Colin Camerer, Professor of Business Economics at the California Institute of Technology, says that it probably evolved that way.

If we always accepted low offers for the sake of tiny gains, we would rapidly get a reputation as a soft touch. Everybody else would try to bilk us at every turn. By acting apparently against our interests, we do better in the long run.

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Thanks for the insight, professor, but a 5 year old can tell you this.

So I ask again: In plain English, what actual real world insight does this give us into the human mind, or behavior, that we didn't have already.

Re: Nice little article introducing neuro-economics
 

[ QUOTE ]
It's a one-time situation with a stranger, declining any offer is a loss with no downstream benefits.
If this was a situation in our social group (and extended) where it would influence later actions and treatment then declining has implied gains.
Declining in this case has our mind confusing the actual situation with our normal situation and is irrational. ??


[/ QUOTE ]

I'm not sure it matters if it's iterated or not. I have two choices as to how $10 should be split between three parties:

1. myself
2. my opponent in the game, and
3. the person offering up the $10

One of my choices is (0,0,10). The other is (x, 10-x, 0), where x is the amount offered up by my opponent.

What is so irrational about looking beyond my own immediate interests and considering what I believe to be just and fair for all parties involved?

All I'm assuming is that the other parties are human beings on planet Earth with life expectancies of a similar order of magnitude to mine. Are these unreasonable assumptions?

Re: Nice little article introducing neuro-economics
 

It's so good to see that economists are finally starting to step away from the preposterous theory of human nature used by neoclassical economics.

Re: Nice little article introducing neuro-economics
 

[ QUOTE ]
[ QUOTE ]
It's a one-time situation with a stranger, declining any offer is a loss with no downstream benefits.
If this was a situation in our social group (and extended) where it would influence later actions and treatment then declining has implied gains.
Declining in this case has our mind confusing the actual situation with our normal situation and is irrational. ??


[/ QUOTE ]

I'm not sure it matters if it's iterated or not. I have two choices as to how $10 should be split between three parties:

1. myself
2. my opponent in the game, and
3. the person offering up the $10

One of my choices is (0,0,10). The other is (x, 10-x, 0), where x is the amount offered up by my opponent.

What is so irrational about looking beyond my own immediate interests and considering what I believe to be just and fair for all parties involved?

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That's kind of a deviation from what's being discussed. By "irrational," we're talking about the human tendency to minimize personal gain solely for the utility of destroying the utility for someone else. (Declining an offer of $2 that gives someone else $8.) If human beings are incentivized to destroy the utility of another, the problems posed to the economy are obvious: useful resources that provide sustinence, security and comfort are destroyed. Civilization can only come about if we are trying to icrease utility/resources; not destroy them.

Not to drag AC into this, but I think it's logical to believe that the utility in supporting redistribution is not just about benevolently aiding the poor, but also about maliciously harming the wealthy.

However, it's indisputable that some people are more affected by emotion than others. The professional poker players here have managed to override a lot of the emotional drives that are rationally unprofitable simply through an understanding of game theory and math; in so doing, they create for themselves new rewards and punishments that are more rational in nature, by conquering results-oriented thinking. (For example, I believe a pro poker player is more likely to feel guilty about making a bad call and sucking out than a fish, and more likely to feel proud about making a disciplined fold when he doesn't get the odds, and then see the miracle card come in)

I also have a feeling that the understanding of our naturally bad judgement mechanisms influences us in a direction of greater rationality.

Re: Nice little article introducing neuro-economics
 

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It's so good to see that economists are finally starting to step away from the preposterous theory of human nature used by neoclassical economics.

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It would be equally preposterous to think that any such nature is static.

Re: Nice little article introducing neuro-economics
 

What about the natural tendency to want to do things that are beneficial for the group? By declining the unfair proposal, you are creating a motive for mutually beneficial behavior, right? We're benevolently selfish!

Re: Nice little article introducing neuro-economics
 

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By "irrational," we're talking about the human tendency to minimize personal gain solely for the utility of destroying the utility for someone else.

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It's not a frivolous destruction of utility, though. By making an offer which I deem unfair, he has transgressed upon me. It's not a violation of property rights according to AC theory of course since he didn't harm me physically, coerce me, or take any physical posession of mine, but guess what? My defintion of a transgression is different from that of an ACer. I have a particular value system which forms the set of axioms that I use as the basis for all my reasoning. From there, applying cold hard logic to the situation leads to declining smaller offers.

Just because my axioms are different from yours or those of ACers doesn't mean I'm irrational. Irrationality occurs when I deviate from my own values because of emotion. That might happen in an argument with my wife, for example, or some other stressful situation when my reasoning abilites are impaired.

What seems irrational to me, though, is to assume human nature is (or should be) a certain way despite strong evidence to the contrary and assume anyone who has other values is irrational.

Re: Nice little article introducing neuro-economics
 

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You know, you've been little but a troll in those discussions. Go and reread them. Your contribution was repeated assertions with vague references to decade old debates, you rarely discussed specifics or tackled any of the points I made. You're the perfect example of someone in an intellectual ivory tower. I know, based on our earlier debates, that you won't understand a word of that.

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Wow, I'm stunned that you just called me a troll. You're the one rehashing the same ignorant points over and over again.
I made statements that I backed up with citations, not assertations. While some were a decade or more old (from when this debate had a couple respectable scientists still on your side of it) many of those citations were from the past few years.

Do you know what I do for a living? I'm a neuroscientist. My doctorate was on brain evolution. I then did a fellowship on brain evolution. I feel pretty comfortable saying I've read more about this subject, thought more about this subject, and discussed this subject with experts in the field more than anyone else on this forum. The funny thing is, when I started in the neurosciences I had the same point of view as you. What I learned changed it.

And you dismiss that all with a wave of your folk wisdom-filled hand. What do you mean by intellectual ivory tower? That someone is actually educated in a subject?

You're basically saying "Scientists are not the most qualified people to do science."

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Back on topic...what exactly have researchers found that's news? I haven't read the original research, and frankly I don't care to. The lack of meat in the article says it all.

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Lack of meat? LOL. This explains a lot. It's not a scientific article - it's a newspaper article ABOUT a scientific article. A lot of things just became clearer for me.

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This is my summary of the research findings:

- When the researchers change the functioning of a part of a person's brain that may be involved in decision making, they made a decision that coincided more strongly with their rational self interest (according to the researcher's definition of rational self interest). That's the only data point I can see here. What a truly shocking discovery. They then go on to speculate wildly about all manner of things, based on this single data point.

From what I can see, the only reasonable statements that can be made from this "discovery" are:

1. There are parts of the brain involved in decision making
2. People can make more or less emotionally based decisions when these parts are subject to stress.

Everything else is non evidence based speculation on things that have been known for decades. If I've left anything out, please state exactly what else you think this discovery proves or indicates.

[/ QUOTE ]

Holy crap. You don't think investigating the neural substrate of, and evolutionary reasons for, decision making in humans has merit?

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Just an observation. There is more to self interest than just economic self interest, a fact which they downplay early on but give a nod to later in the article (completely undermining the false dichotomy they'd set up in the first place in order to frame the useless research).

Below is an example of the crap that fills areas such as neuro economics. This is not science, nor does it offer any insight. It's nothing more than highly unsophisticated speculation, and it should be discouraged instead of celebrated.

[/ QUOTE ]

Can you explain to us what science is then according to you?

Re: Nice little article introducing neuro-economics
 

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It's not a frivolous destruction of utility, though. By making an offer which I deem unfair, he has transgressed upon me. It's not a violation of property rights according to AC theory of course since he didn't harm me physically, coerce me, or take any physical posession of mine, but guess what? My defintion of a transgression is different from that of an ACer. I have a particular value system which forms the set of axioms that I use as the basis for all my reasoning. From there, applying cold hard logic to the situation leads to declining smaller offers.

Just because my axioms are different from yours or those of ACers doesn't mean I'm irrational. Irrationality occurs when I deviate from my own values because of emotion. That might happen in an argument with my wife, for example, or some other stressful situation when my reasoning abilites are impaired.

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Can those core values ever be irrationally constructed?

One of the best examples I can think of is a no-talent adolescent with dreams of hitting it big in the music industry and becoming a rock star. It's not that uncommon of a scenario, but the fulfillment of those wishes is EXTREMELY uncommon. Most adolescents don't realize (or defiantly ignore) just how difficult and unlikely such a result is, and almost all eventually become disappointed. Some become slacking adults with similarly juvenile aspirations that are impossible.

I consider rational paradigms to be those that are conducive to actions that are most likely to result in happiness (the definition of which is unfortunatel complicated), while factoring in the dimension of time (an action that yields immediate happiness at the expense of future happiness, like shooting heroin, is not always rational). What do you think?

Re: Nice little article introducing neuro-economics
 

I will go back to reading the article, to see if there is some worthwhile insight, but I have temporailly stopped after reading this:

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IMAGINE that you are sitting next to a complete stranger who has been given £10 to share between the two of you. He must choose how much to keep for himself and how much to give to you.

He can be as selfish or as generous as he likes, with one proviso: if you refuse his offer, neither of you gets any money at all. What would it take for you to turn him down?

This is the scenario known to economists as the ultimatum game. Now the way we play it is generating remarkable insights into how the human brain drives financial decisionmaking, social interactions and even the supremely irrational behaviour of suicide bombers and gangland killers.

According to standard economic theory, you should cheerfully accept anything you are given. People are assumed to be motivated chiefly by rational self-interest, and refusing any offer, however low, is tantamount to cutting off your nose to spite your face.

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This is just stupid. This ridiculous result does not in any way depend on "standard economic theory", it depends on suckers.

This scenario becomes precisely clear when we realize that it is exactly symmertic, i.e. it does not matter which person is "given" the $10 initially; both players must agree on the split for either to be paid. The only possible rational solution is to offer and accept only $5.

Any player who accepts less than $5 has not thought about the game thoroughly (and hence is not "perfectly rational", in the game theoretic sense).

A player who accepts $0 rather than agreeing to $4 has made precisely no worse of a mistake than the player ending up with $0 after holding out for $6.

There is nothing at all in this game that confounds "standard economic theory."

This article better pick up fast.

Re: Nice little article introducing neuro-economics
 

[ QUOTE ]
I will go back to reading the article, to see if there is some worthwhile insight, but I have temporailly stopped after reading this:

[ QUOTE ]
IMAGINE that you are sitting next to a complete stranger who has been given £10 to share between the two of you. He must choose how much to keep for himself and how much to give to you.

He can be as selfish or as generous as he likes, with one proviso: if you refuse his offer, neither of you gets any money at all. What would it take for you to turn him down?

This is the scenario known to economists as the ultimatum game. Now the way we play it is generating remarkable insights into how the human brain drives financial decisionmaking, social interactions and even the supremely irrational behaviour of suicide bombers and gangland killers.

According to standard economic theory, you should cheerfully accept anything you are given. People are assumed to be motivated chiefly by rational self-interest, and refusing any offer, however low, is tantamount to cutting off your nose to spite your face.

[/ QUOTE ]

This is just stupid. This ridiculous result does not in any way depend on "standard economic theory", it depends on suckers.

This scenario becomes precisely clear when we realize that it is exactly symmertic, i.e. it does not matter which person is "given" the $10 initially; both players must agree on the split for either to be paid. The only possible rational solution is to offer and accept only $5.

Any player who accepts less than $5 has not thought about the game thoroughly (and hence is not "perfectly rational", in the game theoretic sense).

A player who accepts $0 rather than agreeing to $4 has made precisely no worse of a mistake than the player ending up with $0 after holding out for $6.

There is nothing at all in this game that confounds "standard economic theory."

This article better pick up fast.

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Calm down.

The proposed situation in the article is SINGULAR. Non-iterated. The tendency for people to turn down any quantity, assuming that this action will have no impact on the future, is irrational.

However, I agree that it's a poor analog of economics.

Re: Nice little article introducing neuro-economics
 

The human reaction, though, is exactly what we expect, because there is a selective advantage to fairness, because in the real world (the economic world) these "games" are almost never single. Almost all economic interactions are "iterated"; hence there is a selective advantage to holding out for "fairness", even if the individual doesn't consciously realize it. This is NOT in conflict with any economic analysis. Essentially, what I'm saying is that the "sense of righteous indignation at unfairness" acts to lower the individual's time preference.

This: "Our ancestors were better at surviving if they were bloody-minded." is particularly stupid. The article is making the point that it is precisely the fair, and those that hold out for fairness that are better at surviving, not the "bloody-minded."

This is right in line with the post I've been thinking about making that makes the points that human beings are "domesticated", i.e. we've been inadvertantly bred to get along with other humans in groups just the way we inadvertently bred wolves into dogs and wild grains into wheat and corn. We're domesticated, bred to cooperate. But because of the massive advantages of specialization and the division of labor, we've also been bred to "truck and barter", in the words of Adam Smith, as well as to bargain and haggle hard.

Re: Nice little article introducing neuro-economics
 

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Can those core values ever be irrationally constructed?


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I don't think so. Rationality can only start from a set of givens. It cannot start from a vacuum. The givens, by definition, must come from a source outside of rationality and are therefore neither rational nor irrational.

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[One of the best examples I can think of is a no-talent adolescent with dreams of hitting it big in the music industry and becoming a rock star. It's not that uncommon of a scenario, but the fulfillment of those wishes is EXTREMELY uncommon. Most adolescents don't realize (or defiantly ignore) just how difficult and unlikely such a result is, and almost all eventually become disappointed. Some become slacking adults with similarly juvenile aspirations that are impossible.


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True, and I would argue that neither their actions per se nor the values behind them are irrational. They may say a lot of irrational things when discussing their actions, though, indicating they have not fully come to terms with their own state of being. In fact, I'd say that happens in over 99% of the cases.

One possible rational explanation for their actions is that they want to test themselves to see how far they can go. They can maximize their chances relative to their own abilities if they truly believe they can reach the top. Tricking themselves to overvalue their chances is one of their internal techniques to maximize their expected utility. I'm not saying this is necessarily how it is for everyone, just one possibility to show there exist scenarios in which behaving that way may not be irrational.

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I consider rational paradigms to be those that are conducive to actions that are most likely to result in happiness (the definition of which is unfortunatel complicated), while factoring in the dimension of time (an action that yields immediate happiness at the expense of future happiness, like shooting heroin, is not always rational). What do you think?

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I agree with what constitutes a rational paradigm and also with the extreme difficulty in defining happiness (for ourselves, leave alone for others), especially over long periods of time. And I would even argue that the heroin shooter might actually be maximizing his own long-term happiness by shooting heroin (!), assuming he knew enough about the effects of the drug before getting into it. For whatever reason, testing the limits might be of extremely high value to him. Only he can know that. If it's of high enough value, then taking huge risks would be the rational course of action for him. As an outside observer, I would sooner assume there is something about his underlying values that makes his actions rational than assume that he's not acting in accordance with his own underlying values. The reason is simply based on the statistics of prior observations that I have made in situations when I've been able to get a lot of information and analyse things deeply.

Re: Nice little article introducing neuro-economics
 

[ QUOTE ]
The human reaction, though, is exactly what we expect, because there is a selective advantage to fairness, because in the real world (the economic world)these "games" are almost never single. Almost all economic interactions are "iterated"; hence there is a selective advantage to holding out for "fairness", even if the individual doesn't consciously realize it. This is NOT in conflict with any economic analysis. Essentially, what I'm saying is that the "sense of righteous indignation at unfairness" acts to lower the individual's time preference.

This: "Our ancestors were better at surviving if they were bloody-minded." is particularly stupid. The article is making the point that it is precisely the fair, and those that hold out for fairness that are better at surviving, not the "bloody-minded."


[/ QUOTE ]

This is true, but note that fairness is not useful in the modern (capitalist) world. Evolution took us through eons of savage hobbesian anarchy, and took the priviledged few species to anarcho-socialism, where animals usually had enough resources to fit immediate needs, and were better off with the "I'll scratch your back if you scratch mine" mentality. For small tribes, this is excellent.

However, when we took the great leap forward, we established a system that is very counter-intuitive. The concept of private property is unappealing when you are starving and someone else has a bounty of food; while it seems unfair, it is the threat of punishment that prevents the starving man from stealing. While private property rights coupled with the threat of punishment for aggressors was the best productivity incentivizer ever, we're still left with evolutionary baggage that makes it seem exploitative and wrong.

This isn't the only case where evolution screws us. When the well-being of an animal is threatened (often by the presence of a predator), it will biologically trigger an autonomic response: heart and lungs will accelerate, muscular nutrients are secreted, digestion is inhibited, spatial awareness is increased, and prefrontal activity is inhibited. The reason is that it is advantageous for the animal to be prepared for a situation where he is going to either kill something or run like hell. That's very important in the animal world, but in the modern world it can be a liability. A dangerous operation will naturally have the same effect on a doctor, however, being primed to run or kill with a scalpel in his hand is very disadvantageous. Human beings who are less affected by the autonomous nervous system are much more ideal for high-stress white-collar positions, as they are able to be logical or diplomatic under pressure. (Hence, why personality is so important for many employers; risk-taking preference is much more demonstrable in personality than in IQ tests)

So with all this evolutionary baggage, human beings are left intuitively judging fairness to be right, even in large economic systems where it is simply not practical. That's why people are so naturally inclined toward socialism and hating the rich.

Re: Nice little article introducing neuro-economics
 

[ QUOTE ]
[ QUOTE ]
The human reaction, though, is exactly what we expect, because there is a selective advantage to fairness, because in the real world (the economic world)these "games" are almost never single. Almost all economic interactions are "iterated"; hence there is a selective advantage to holding out for "fairness", even if the individual doesn't consciously realize it. This is NOT in conflict with any economic analysis. Essentially, what I'm saying is that the "sense of righteous indignation at unfairness" acts to lower the individual's time preference.

This: "Our ancestors were better at surviving if they were bloody-minded." is particularly stupid. The article is making the point that it is precisely the fair, and those that hold out for fairness that are better at surviving, not the "bloody-minded."


[/ QUOTE ]

This is true, but note that fairness is not useful in the modern (capitalist) world.

[/ QUOTE ]

What color is the sky in Crazy World?

What happens to economic exchangers who habitually do not act fairly to the other party to the exchange?

Re: Nice little article introducing neuro-economics
 

Vanilla.

They topple over in the end if they're noticed taking edges for too long. There's a causative effect there too that isn't mentioned. Cold dishes are generally the sweetest of all.

Re: Nice little article introducing neuro-economics
 

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This is just stupid. This ridiculous result does not in any way depend on "standard economic theory", it depends on suckers.

[/ QUOTE ] Standard economic theory = neoclassical economics, not Austrian Economics. This paragraph goes against what is predicted in this situation by neoclassical economics; namely,

Person Y gets the money and must split with X. Y will pick 1 cent (or whatever the minimu is), knowing that X is a hom-o economicus who will always take something over nothing. X will accept the offer, because he prefers the outcome of one penny to zero cents (which would be his outcome if he rejected the offer).

Re: Nice little article introducing neuro-economics
 

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It would be equally preposterous to think that any such nature is static.

[/ QUOTE ] Correct; mutation and natural selection are the only constants in human nature i.e. a very slow process of change is the only constant.

Re: Nice little article introducing neuro-economics
 

[ QUOTE ]
This scenario becomes precisely clear when we realize that it is exactly symmertic, i.e. it does not matter which person is "given" the $10 initially; both players must agree on the split for either to be paid. The only possible rational solution is to offer and accept only $5.

Any player who accepts less than $5 has not thought about the game thoroughly (and hence is not "perfectly rational", in the game theoretic sense).

[/ QUOTE ]

I'm confused as to why you're so fired up about this.

Re: Nice little article introducing neuro-economics
 

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
The human reaction, though, is exactly what we expect, because there is a selective advantage to fairness, because in the real world (the economic world)these "games" are almost never single. Almost all economic interactions are "iterated"; hence there is a selective advantage to holding out for "fairness", even if the individual doesn't consciously realize it. This is NOT in conflict with any economic analysis. Essentially, what I'm saying is that the "sense of righteous indignation at unfairness" acts to lower the individual's time preference.

This: "Our ancestors were better at surviving if they were bloody-minded." is particularly stupid. The article is making the point that it is precisely the fair, and those that hold out for fairness that are better at surviving, not the "bloody-minded."


[/ QUOTE ]

This is true, but note that fairness is not useful in the modern (capitalist) world.

[/ QUOTE ]

What color is the sky in Crazy World?

What happens to economic exchangers who habitually do not act fairly to the other party to the exchange?

[/ QUOTE ]

I'm referring to fairness of result, not fairness of opportunity. In tribal anarchy, one who produces a lot has his resources consumed by the tribe...of course, this isn't a problem with small populations, since your tribe members are your closest friends and family.

Re: Nice little article introducing neuro-economics
 

[ QUOTE ]
Hijack time.

Rduke:

How, in your opinion, should this discovery be applied? [img]/images/graemlins/smile.gif[/img]

[/ QUOTE ]

That's a good question and I'm not sure.

Of course I'd imagine it's useful for insight into some mental disorders.
Outside of that, the talks I went to was put on by our law school so I'd guess that they think there may be applications there.

Re: Nice little article introducing neuro-economics
 

[ QUOTE ]
The proposed situation in the article is SINGULAR. Non-iterated. The tendency for people to turn down any quantity, assuming that this action will have no impact on the future, is irrational.

However, I agree that it's a poor analog of economics.

[/ QUOTE ] We agree-surprise, surprise.

Neoclassical economics doesn't take ideas of fairness and reciprocity and their effects on iterated transactions into place.

Re: Nice little article introducing neuro-economics
 

[ QUOTE ]
[ QUOTE ]
It would be equally preposterous to think that any such nature is static.

[/ QUOTE ] Correct; mutation and natural selection are the only constants in human nature i.e. a very slow process of change is the only constant.

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I disagree.

Human beings are capable of rational logic, and frequently do not exercise it because it is overrun by emotional mechanisms that evolved for survival in a primitive world, as OP demonstrates.

However, the awareness of these mechanisms gives one the ability to change them. It is instinctive for an individual to feel inferior in the face of another's success, and accordingly act competitively, enmiring oneself in work, debt and misery. However, the awareness that this isn't really going to get you anywhere and that happiness is much, much easier to secure through other methods (having like-minded friends, lowering material expectations, doing things you like, not giving a [censored] about what other people think) gives anyone the power to override the animal instinct.

The beauty of psychology is that it gives the seeing eye the ability to see itself.

Re: Nice little article introducing neuro-economics
 

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Outside of that, the talks I went to was put on by our law school so I'd guess that they think there may be applications there.

[/ QUOTE ] I'm sure their is an application, and the prevailing economic theory is of course influential on public policy but I imagnine this talk was put on in the law school because of a legal theory called " Law and Economics", which uses the neoclassical models being falsified by neuro-economics.

Re: Nice little article introducing neuro-economics
 

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I disagree.

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Not exactly; mutation and natural selection also gave us rational logic, of course. And shapes whether we will use it or not, how it works, and who will use it.

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However, the awareness that this isn't really going to get you anywhere and that happiness is much, much easier to secure through other methods (having like-minded friends, lowering material expectations, doing things you like, not giving a [censored] about what other people think) gives anyone the power to override the animal instinct.

[/ QUOTE ] I strongly disagree with this; I can think of many examples of people who were aware of the orgin of urges (e.g. people well versed in evolutionary theory who are overweight because of overeating or pursuing relative status or at least distraught about not doing so) who can't seem to stop performing the action.

Furthermore, the emotional traits you talk about often bring people disutility if they don't perform the action traditionally used to satiate the passion. They might not perform the action that the emotion urges them to perform, but the emotion is still their, nagging away at their concious and subconcious.

Re: Nice little article introducing neuro-economics
 

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Not exactly; mutation and natural selection also gave us rational logic, of course. And shapes whether we will use it or not, how it works, and who will use it.

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True, but my point was that the results of evolution are now more useful to survival than evolution itself. Consider civilization; the welfare of humankind is influenced far more greatly by the social norms we implement rather than the results of natural selection.

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I strongly disagree with this; I can think of many examples of people who were aware of the orgin of urges (e.g. people well versed in evolutionary theory who are overweight because of overeating or pursuing relative status or at least distraught about not doing so).

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Your position is that the knowledge of a pertinent biological mechanism does not affect someone's behavior? [img]/images/graemlins/confused.gif[/img]

So, the knowledge of long-term damage by cigarrette smoking does not create a disincentive to smoke cigarettes? The knowledge that excessive cocaine use leads to overdose doesn't create a disincentive to slow down? The knowledge that alcohol-related dehydration leads to hangover does not create an incentive to drink lots of water after a party?

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Furthermore, the emotional traits you talk about often bring people disutility if they don't perform the action traditionally used to satiate the passion. They might not perform the action that the emotion urges them to perform, but the emotion is still their, nagging away at their concious and subconcious.

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My brother stopped his pack-a-day habit a year ago. He said it really sucked, but he knew it was something he had to do. Contrast this with a rab rat who, given the ability to administer nicotine, cocaine or morphine injections, will keep administering until it OD's. Care to explain?

Re: Nice little article introducing neuro-economics
 

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Your position is that the knowledge of a pertinent biological mechanism does not affect someone's behavior?

[/ QUOTE ] No, it does effect that person's behavior. This situation extremely complex; way more complex than you are portraying it.

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Consider civilization; the welfare of humankind is influenced far more greatly by the social norms we implement rather than the results of natural selection.


[/ QUOTE ] This of course presupposes that the norms we implement are not also largely a product of natural selection.

Also, many social norms (e.g. norms against adultery or premartial sex in the past in our society) have been imperfectly followed-to say the least-because those norms are contrary to the impulses and behaviors that natural selection have given us. Just because a social norm exists does not mean it will be followed.
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My brother stopped his pack-a-day habit a year ago. He said it really sucked, but he knew it was something he had to do. Contrast this with a rab rat who, given the ability to administer nicotine, cocaine or morphine injections, will keep administering until it OD's. Care to explain?

[/ QUOTE ] Obviously this occurs. In the paragraph you quoted I admitted, more or less, that some people some of the time will not perform behaviors that emotions that have been selected by evolution "intend" for them to perform. Once again, it is simply the case that I don't think the subject we are discussing is as simple as "we understand psychology and evolution so can conquer it in a mind over matter scenario".

Re: Nice little article introducing neuro-economics
 

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This of course presupposes that the norms we implement are not also largely a product of natural selection.

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I'm tempted to argue that laws change a little too quickly to be naturally selected, although, perhaps natural selection of social norms does occur, just in a different way (since it isn't biological data that's being replicated.) This is an interesting idea, I'll have to think about it some other time.

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Obviously this occurs. In the paragraph you quoted I admitted, more or less, that some people some of the time will not perform behaviors that emotions that have been selected by evolution "intend" for them to perform. Once again, it is simply the case that I don't think the subject we are discussing is as simple as "we understand psychology and evolution so can conquer it in a mind over matter scenario".

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The actual processes are difficult to impossible to measure, but I think the principle of increased availability of information leading to better choices is pretty sound.

Re: Nice little article introducing neuro-economics
 

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This scenario becomes precisely clear when we realize that it is exactly symmertic, i.e. it does not matter which person is "given" the $10 initially; both players must agree on the split for either to be paid. The only possible rational solution is to offer and accept only $5.

Any player who accepts less than $5 has not thought about the game thoroughly (and hence is not "perfectly rational", in the game theoretic sense).

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I'm confused as to why you're so fired up about this.

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I'm not really "fired up", per se. I'm just not sure what the big deal is. Austrians like Mises, Rothbard, and Hoppe and Hoppe in particular have been saying things like this for decades, although without the (I think incredibly useful and enlightening) evolutionary angle.

Re: Nice little article introducing neuro-economics
 

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The human reaction, though, is exactly what we expect, because there is a selective advantage to fairness, because in the real world (the economic world)these "games" are almost never single. Almost all economic interactions are "iterated"; hence there is a selective advantage to holding out for "fairness", even if the individual doesn't consciously realize it. This is NOT in conflict with any economic analysis. Essentially, what I'm saying is that the "sense of righteous indignation at unfairness" acts to lower the individual's time preference.

This: "Our ancestors were better at surviving if they were bloody-minded." is particularly stupid. The article is making the point that it is precisely the fair, and those that hold out for fairness that are better at surviving, not the "bloody-minded."


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This is true, but note that fairness is not useful in the modern (capitalist) world.

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What color is the sky in Crazy World?

What happens to economic exchangers who habitually do not act fairly to the other party to the exchange?

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I'm referring to fairness of result, not fairness of opportunity. In tribal anarchy, one who produces a lot has his resources consumed by the tribe...of course, this isn't a problem with small populations, since your tribe members are your closest friends and family.

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"Fairness of results", I suspect, is a rather different matter entirely. As you yourself have pointed out, we have to be indoctrinated with years of school to believe that what matters is relative wealth, "fairness of results."

The sense of "righteous indignation at being treated unfairly" is an extremely useful thing in society. It fosters cooperation, specialization, and the division of labor.

I don't think people naturally believe that it is "unfair" that others who have more material wealth than them (although there are of course pathological cases); that's a cultural thing; people have to be taught it. Which is exactly what happened in places like Haiti.

However, that doesn't mean that people (usually states) don't take advantage of the sense of "righteous indignation at being treated unfairly". I bolded "treated" because I think it's the crucial word. Middle Eastern government rile up hatred against the United States by telling them not that the Americans are free (cause you know, they all hate freedom over there), but that America does not treat fairly with Moslem nations. In fact most of the rest of the world does the same thing. It doesn't help matters, f course, that very often the US government doesn't treat fairly.

The fact that America is materially wealthy is only used as a signal to show that she must have gotten that way by "exploiting" the rest of the world, i.e. treating unfairly. Nobody gets upset at the obvious idea of "if you produce more, you have more." Except of course pathological cases like Propertarian.