Bargaining and Coalition Formation Dr James Tremewan (james.tremewan@univie.ac.at) Biology and Bargaining
Biology and Bargaining Biology and Bargaining • ”Heritability of Ultimatum Game Responder Behavior”, Wallace et al (2007). • The effect of testosterone on behaviour in the UG: • Burnham (2007). • Zak et al (2009). • Eisenegger et al (2010). • Zethraeus et al (2009). • ”Diminishing Reciprocal Fairness by Disrupting the Right Prefrontal Cortex”, Knoch et al (2006). 2/20
Wallace et al (2007) Wallace et al (2007) • To what extent is responder behaviour 1 in the UG influenced by social/environmental and genetic factors? • Standard approach to answer this question is a Twin Design: • Monozygotic twins share identical genes; Dizygotic twins have imperfectly correlated genes. • Both types of twins share the same environment. • A greater correlation in behaviour between monozygotic twins than for dizygotic twins implies a genetic influence on behaviour. • Variation in behaviour can be broken down into genetic, common environmental, and non-shared environmental effects. • This study uses 71 DZ and 258 MZ pairs of twins from the Swedish Twin Registry at the Karolinska Institutet. • All subjects made decision as Proposer, then decisions whether to accept or reject every multiple of 10% (”strategy method”). 1 Almost no deviation from 50-50 split in proposer behaviour in Sweden. 3/20
Wallace et al (2007) Wallace et al (2007): Findings No statistically significant difference between MZ and DZ acceptance thresholds. 4/20
Wallace et al (2007) Wallace et al (2007): Findings continued • Spearman rank correlations: • Monozygotic twins: 0.39 • Dizygotic twins: -0.04 • Difference highly significant ( P < 0 . 01, two sided) • Point estimates of standard threshold model to decompose contributions to variation in behaviour: • Genetic contribution: 42% • Common environmental contribution: 0% • Non-shared environmental contribution: 58% • Conclusion: genetic influences are important determinants of rejection behaviour in the ultimatum game. 5/20
Testosterone and the Ultimatum Game Burnham (2007): High-testosterone men and UG responder behaviour • Individual testosterone levels are under genetic influence - perhaps an explanation for Wallace et al findings? • Testosterone linked to agression, status seeking, reputation-management system, willingness to engage in conflict. • If men interpret low UG offers as a challenge, those with higher testosterone more likely to reject. • All subjects (N=26) made decision as Proposer, then decisions whether to accept or reject either possible offer ($5 or $25 out of $40). • Testosterone level measured from saliva on three non-experimental days at same time as UG decisions (14.00 - when rate of change of diurnal testosterone cycle is lowest). 6/20
Testosterone and the Ultimatum Game Burnham (2007): Findings • Subjects who rejected $5 ( N = 6) had higher testosterone levels on average than those who accepted ( N = 20), P < 0 . 01. • Proposers offering $25 had higher testosterone levels on average than those offering $5, but not difference not significant. 7/20
Testosterone and the Ultimatum Game Zak et al (2009) • Burnham (2007) identified correlation but not causation - need randomized manipulation of testosterone level. • Double-blind experiment, 25 men, within-subject design, pie=$10. • Testosterone administered using gel - blood tests to confirm increase in levels. • All subjects make decisions as Proposer and Receiver (acceptance threshold, i.e. strategy method). • Four decisions in each role with stranger matching. • They report tests on proposal levels, rejection threshold, and ”generosity” (defined as individual difference between proposal and rejection threshold). 8/20
Testosterone and the Ultimatum Game Zak et al (2009): Findings and Comment • Average proposals lower when on T (T: $4.63, Placebo: $5.08, one-tailed paired t-test, N=200, p=0.001). • Rejection threshold higher when on T, but not significant (T: $3.05, Placebo: $2.92, one-tailed paired t-test, N=200, p=0.61). • Generosity lower when on T (T: $1.57, Placebo: $2.15, one-tailed paired t-test, N=200, p=0.035). • BUT: N=200?! No allowance for correlation between an individual’s decisions - seriously dodgy! • The author’s mention that there is variation in individuals’ decisions (average within-subjects SD of: proposals: $0.68; rejection threshold: $1.19; and generosity: $1.55). Not clear from paper if subjects received feedback between rounds: if so, also non-independence of observations between subjects in same session; if not, why the variation in decisions? 9/20
Testosterone and the Ultimatum Game Eisenegger et al (2010) • Double-blind experiment, between-subject design, pie=10 Swiss Francs. • Subjects make decisions as either Proposer or Receiver • Offer either 5, 3, 2, or 0 Swiss Francs. • Receiver accepts or rejects (not strategy method). • Three decisions with stranger matching (no feedback). • Testosterone or placebo administered sub-lingually. • 121 female subjects (mean age=25 years). • Only female because required quantity and time for effect of treatment currently unknown for males • Subjects screened to ensure not pregnant, psychotic, etc. 10/20
Testosterone and the Ultimatum Game Eisenegger et al (2010) • Competing hypotheses for Proposers: • ”Folk” hypothesis: T increases aggressive, egoistic behaviour (T lowers offers). • ”Social status” hypothesis: T increases concern for social status 2 and thus avoidance of rejection, which is a threat to status (T increases offers). • Also ask for belief about whether treated with T or placebo: • Social status hypothesis implies T increases offers. • Belief that one has been treated with T could be associated with lower offers if subjects believe Folk hypothesis (excuse for selfish behaviour?). 2 Which may be the underlying cause of aggressive behaviour, etc. 11/20
Testosterone and the Ultimatum Game Eisenegger et al (2010): Results • Main results are from ANOVA model relating subject’s mean offer to actual treatment and belief. 3 • Subjects who received T made higher offers (T: $3.90, Placebo: $3.40, ANOVA, N=60, p=0.031). • Subjects who believed they received T made lower offers (bT: $3.08, bPlacebo: $3.88, ANOVA, N=60, p=0.006). • No significant correlation between treatment and beliefs, nor interaction effect. • No significant correlation effects on responder behaviour. 3 Justification for this model and further robustness tests are given in ”Supplementary Information”. 12/20
Testosterone and the Ultimatum Game Zethraeus et al (2009) • Double-blind experiment, between-subject design, pie=SEK 400. • Subjects (203 Swedish post-menopausal women) were treated with testosterone, estrogen, or placebo for four weeks. • All subjects make decisions as Proposer and Receiver (acceptance threshold, i.e. strategy method). • Testosterone levels 4 times higher in treated group. • No significant effect found of testosterone (or estrogen) in UG behaviour 4 (or risk preferences, behaviour in a dictator and trust game). 4 Again very little deviation from 50-50 split in Proposer decision. 13/20
Testosterone and the Ultimatum Game Discussion • Contradictory results in studies could result from: • Different experimental procedures (playing one or both roles, strategy method, etc.) • Different subject pools (testosterone may have different effects in males and females, which may depend on age). • Zethraeus et al (2009) conclude that: • Previously identified correlation between endogenous testosterone levels and behaviour are due to some other underlying biological factor. • Results may be spurious, with lack of countervailing evidence due to publication bias (i.e. 20 studies are run, and only one finds significance at %5 level, but this is the only ”interesting” result, so only one to be published.) 14/20
Knoch et al (2006) Knoch et al (2006) • Sanfey et al (2003) found that the right dorsolateral prefrontal cortex of UG responders was activated more by unfair offers. • But is the R DLPFC crucial for determining response to fair/unfair behaviour? 15/20
Knoch et al (2006) Knoch et al (2006) • Brain activity can be disrupted by repetitive transcranial magnetic stimulation (rTMS): Electric current passed through metal coil placed on scalp to produce magnetic field which affects firing of neurons. • Each subject (n=52) played as responder in UG 10 times in one of three treatments: rTMS of left DLPFC, rTMS of right DLPFC, or ”sham” rTMS. • Subjects also asked about perceived fairness of offers on a scale from 1 to 7. • In 10 games Proposer chooses offer; in 10 computer randomly chooses for Proposer - tests ”negative reciprocity” vs ”inequity aversion.” 16/20
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