Group Effect And Its Impact On Economic Decision-making

Traditional economic theories were based on the basic assumption of "economic man", according to which individuals always seek to maximize their own benefits when making economic decisions. However, as social creatures, people can barely make decisions in isolation. For most of the times, they will be unconsciously influenced by various social norms, and group classification is among the most influential social factors.Previous studies suggested that people are affected by their social classifications making economic decisions in social interactions. Traditionally, researchers assume that, people incline to show preferences for in-group members on most occasions, which is defined as the phenomenon of in-group favoritism. However, in recent years, a growing number of studies have found that people tend to exhibit preference for out-group members when making economic decision-making under some specific conditions, which is called the "black sheep effect".In order to explore how the group effect is formed, as well as how the group effect influences individuals’economic decision-making both psychologically and behaviorally, we adapted and examined the model of ultimatum game from a Decision Neuroscience perspective. To be specific, we compared the acceptance rate of fair and unfair offers proposed by both in-group and out-group members and endeavored to better illuminate the contingency of in-group favoritism and the "black sheep effect". In addition, applying Event-related Potentials (ERPs), we tried to probe into the neural basis and cognition processes of these two divergent effects. Three main conclusions of the present study were showed as follows: Social distance has an important influence on both the process and final outcome of economic decision-making in social interactions. Specifically, when the identity of proposers was exhibited, individuals invested more cognitive resources to in-group members who were socially closer to them, as reflected in the greater amplitude of the P2component. Besides, when proposals were demonstrated, group classifications had varied effects on different fairness levels (either fair or unfair), which were supported by the significant interaction effect of the FRN amplitudes. Behaviorally, individuals accepted unfair offers from in-group members more frequently, which demonstrated evident in-group favoritism.The subjective perception of aggressive intentions contributes to the development of either in-group favoritism or "black sheep effect", which further verified that social norms based on group classifications play vital roles in social interactions. If individuals do not perceive the aggressive behaviors from in-group members to be intentional (which do not violate social norms based on groups), in-group favoritism is exhibited, which is reflected as attenuated FRN amplitudes when faced with unfair offers from in-group members as compared to out-group members. In contrast, if individuals perceive the same behavior to be intentional (which directly violate social norms based on groups),"black sheep effect" takes place, which is reflected as enhanced FRN amplitudes towards unfair offers that come from in-group members.Interestingly, we find that behavioral outcomes are not always in line with the underlying cognitive processes. Specifically, while disparate perceived intentions may lead to opposite patterns on the neural level, individuals consistently showed preferences towards in-group members behaviorally. This finding further suggested that decision-making is the rational choice overcoming emotional impulses under certain circumstances.