Logic fights impulse in economic decision-making

November 9, 2011

Money can make people act crazy, but there is a small group of people that act more rationally than most, and this behavior may be due to their high "cognitive control," according to a new study being published in the Nov. 9 issue of the online journal PLoS ONE.

The researchers, led by Wim De Neys of National Center for Scientific Research (CNRS) in France, tested subjects' behavior in the , in which two players have to split a sum of money. One player makes an offer, and the other must accept or refuse the offer. If it is declined, neither receives any money. The rational choice, and the scenario predicted by most economic models, would be for the first player to offer only a small amount to the second player, and for the second player to accept this offer, since something is better than nothing. However, most people do not behave this way. The first player often offers an even split, and the second player often rejects an offer of an uneven split, likely due to strong emotional .

There are, however, a small group of people who behave as expected by the models. When the researchers studied this further, they found that they had high "," as measured by a simple computer task, brain-imaging during a simple computer task, relative to the non-rational players. In other words, they have a generally greater capacity to override impulsive tendencies, which allowed them to behave more in accordance with traditional economic models and make more money in the end.

Explore further: Sense of justice built into the brain

More information: De Neys W, Novitskiy N, Geeraerts L, Ramautar J, Wagemans J (2011) Cognitive Control and Individual Differences in Economic Ultimatum Decision- Making. PLoS ONE 6(11): e27107. doi:10.1371/journal.pone.0027107

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Vendicar_Decarian
1 / 5 (1) Nov 09, 2011
An implicit assumption in this study is that the goal of rational people will be to maximize their profit rather than teaching their opponent that greed will not go unpunished.

Ultimately, which goal is more rational?

The fact that most Economic models presume the wrong answer says much about the fundamental failures of modern Economics - Particularly Conservative/Libertarian Economics.

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