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Neuroeconomic Foundations of Trust and Social Preferences


Fehr, Ernst; Fischbacher, Urs; Kosfeld, Michael (2005). Neuroeconomic Foundations of Trust and Social Preferences. Working paper series / Institute for Empirical Research in Economics No. 221, University of Zurich.

Abstract

This paper discusses recent neuroeconomic evidence related to other-regarding behaviors and the decision to trust in other people’s other-regarding behavior. This evidencensupports the view that people derive nonpecuniary utility (i) from mutual cooperation in socialndilemma (SD) games and (ii) from punishing unfair behavior. Thus, mutual cooperation and the punishment of free riders in SD games is not irrational, but better understood as rationalnbehavior of people with corresponding social preferences. We also report the results of anrecent study that examines the impact of the neuropeptide Oxytocin (OT) on trusting andntrustworthy behavior in a sequential SD. Animal studies have identified Oxytocin as anhormone that induces prosocial approach behavior, suggesting that it may also affect prosocialnbehavior in humans. Indeed, the study shows that subjects given Oxytocin exhibit much morentrusting behavior, suggesting that OT has a direct impact on certain aspects of subjects’ social preferences. Interestingly, however, although Oxytocin affects trusting behavior, it has no effect on subjects’ trustworthiness.

Abstract

This paper discusses recent neuroeconomic evidence related to other-regarding behaviors and the decision to trust in other people’s other-regarding behavior. This evidencensupports the view that people derive nonpecuniary utility (i) from mutual cooperation in socialndilemma (SD) games and (ii) from punishing unfair behavior. Thus, mutual cooperation and the punishment of free riders in SD games is not irrational, but better understood as rationalnbehavior of people with corresponding social preferences. We also report the results of anrecent study that examines the impact of the neuropeptide Oxytocin (OT) on trusting andntrustworthy behavior in a sequential SD. Animal studies have identified Oxytocin as anhormone that induces prosocial approach behavior, suggesting that it may also affect prosocialnbehavior in humans. Indeed, the study shows that subjects given Oxytocin exhibit much morentrusting behavior, suggesting that OT has a direct impact on certain aspects of subjects’ social preferences. Interestingly, however, although Oxytocin affects trusting behavior, it has no effect on subjects’ trustworthiness.

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Working Paper Series > Institute for Empirical Research in Economics (former)
Dewey Decimal Classification:330 Economics
JEL Classification:A13, C90
Language:English
Date:June 2005
Deposited On:29 Nov 2011 22:32
Last Modified:07 Dec 2017 10:10
Series Name:Working paper series / Institute for Empirical Research in Economics
ISSN:1424-0459
Official URL:http://www.econ.uzh.ch/wp.html

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