On the Neurobiological Basis of Economic Decision Making

This thesis aims to contribute to the understanding the neurobiological basis of economic decision making through combining experimental economics with tools in neurobiology including genetics and neuroimaging. We begin in the first chapter with a survey of the literature on individual as well as social decision making including an introduction to the research methodology used. After presenting our finding on the heritability of risk attitude in chapter two, we discuss the neurogenetics of decision under risk (Chapter three); source preference (Chapter four); and fairness preference (Chapter five). In chapter six, we present the results of an fMRI experiment of third party punishment. We conclude by discussing related works and potential areas of follow up research.;Chapter two reports the result of the first study of the heritability of economic risk attitude using a classical twin strategy. We find considerable heritability of risk attitude, at 57%, and we do not find a significant role for shared environmental effects. The latter is a common observation in behavioral genetics that is contrary to commonly held views in economics.;Chapter three presents the first neurochemical model of decision making under risk based on two evolutionarily ancient neurotransmitters --- dopamine and serotonin --- that could jointly account for two significant developments, namely loss aversion and probability weighting, in models such as prospect theory, rank dependent expected utility, and weighted utility. We further validate the hypothesis by bringing to experimental economics the methodology of neurogenetics and find the associations between attitudes toward fourfold risks and the well characterized functional polymorphisms of dopamine transporter (SLC6A4), serotonin transporter (SLC6A3), and monoamine oxidase A (MAOA). This represents the first results linking common polymorphisms to attitudes towards the fourfold pattern of risk attitudes.;In Chapter four, we explore the neurogenetic basis of decision making under uncertainty, specifically, source preference and ambiguity aversion. We find that the serotonin transporter promoter-region polymorphism (SLC6A3 5-HTTLPR), implicated in mood disorders such as anxiety and depression, modulates having a preference for betting on uncertainty from a more familiar source. This is the first result linking a common polymorphism to decision making under uncertainty.;In Chapter five, we study the neurogenetic basis of the preference for fairness using the ultimatum game (UG). Preference for fairness inferred from responder behavior in UG has been shown to be highly heritable in a recent twin study, yet its neurogenetic basis remains unknown. We find that a functional polymorphism dopamine D4 receptor (DRD4) exon3 is significantly associated with this form of fairness preference. We also find a significant interaction between a well-characterized polymorphism in promoter region repeats of monoamine oxidase A (MAOA) and season-of-birth for the preference for fairness. This is the first result linking specific genes to fairness preference. It presents the first evidence of genes and environment interaction in economic decision making.;The neural basis of reciprocal (second party) punishment has been extensively explored in the neuroeconomics literature, yet the neural basis for third party punishment remains unknown. This is addressed in Chapter six, we use fMRI to identify neural correlates using a standard third party punishment design, where the third party can punish the first players in a dictator game. We find that subjects punish more when the unfair offers are from human than from computer, and that the level of punishment for unfair offers is positively correlated with questionnaire-measured empathy scores. Activations in bilateral anterior insula and bilateral anterior cingulate, both implicated in previous studies of empathy, are positively correlated with the degree of unfairness. Moreover, bilateral anterior insula activation is also positively correlated with the level of punishment. These results support the role of empathy in third party punishment, and are consistent with the classical view that empathy lies at the heart of moral sentiments.