Bargaining and Coalition Formation Dr James Tremewan - - PowerPoint PPT Presentation

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).

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Wallace et al (2007)

Wallace et al (2007)

• To what extent is responder behaviour1 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”).

1Almost no deviation from 50-50 split in proposer behaviour in

Sweden.

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Wallace et al (2007)

Wallace et al (2007): Findings

No statistically significant difference between MZ and DZ acceptance thresholds.

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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.

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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

• f $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).

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Testosterone and the Ultimatum Game

Burnham (2007): Findings

• Subjects who rejected $5 (N = 6) had higher testosterone levels
• n 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.

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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).

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Testosterone and the Ultimatum Game

Zak et al (2009): Findings and Comment

• Average proposals lower when on T (T: $4.63, Placebo: $5.08,
• ne-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,
• ne-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?

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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.

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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

status2 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?).

2Which may be the underlying cause of aggressive behaviour, etc.

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Testosterone and the Ultimatum Game

Eisenegger et al (2010): Results

• Main results are from ANOVA model relating subject’s mean
• ffer 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.

3Justification for this model and further robustness tests are given in

”Supplementary Information”.

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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

behaviour4 (or risk preferences, behaviour in a dictator and trust game).

4Again very little deviation from 50-50 split in Proposer decision.

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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.)

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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?

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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
• f 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.”

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Knoch et al (2006) 17/20

Knoch et al (2006) 18/20

Knoch et al (2006) 19/20

Knoch et al (2006)

Discussion

• Disruption of right DLPFC reduces fair behavioural responses

but not fairness judgements.

• Subjects in left DLPFT and sham treatments took longer to

respond to unfair than fair offers, but this effect not present in right DLPFC treatment.

• Conflict between selfish and fairness related motives takes time

to resolve. Right DLPFC important in over-riding selfish behaviour in favour of fairness.

• Much smaller treatment difference for computer generated offers

suggests right DLPFC important for reciprocity motives rather than simple inequity aversion.

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