The possibility that asset markets could be strategically manipulated by large informed traders has fascinated social scientists and market observers for years. There is a well-known story of minions of Nathan Rothschild, who was thought to have the fastest carrier pigeons in London, selling...

In the last ten years theory (e.g., Fudenberg and Levine, 1998) and empirical data fitting have provided many ideas about how equilibria arise in games or markets. This short chapter describes a very general approach to learning in games: "experience-weighted attraction" (EWA) learning. This...

One lingering puzzle is why voluntary contributions to public goods decline over time in experimental and real-world settings. We show that the decline of cooperation is driven by individual preferences for imperfect conditional cooperation. Many people's desire to contribute less than others,...

The proposed 2008 TARP auction was intended to facilitate rapid purchases by the U.S. department of Treasury of a wide array of mortgage-backed securities in order to remove these “toxic assets” from the portfolios of financially stressed banks. The Treasury had selected a Reference Price...

In this paper, we investigate the effects of competition on bargained outcomes. We show that the neglect of either fairness concerns or decision errors will prevent a satisfactory understanding of how competition affects bargaining. We conducted experiments which demonstrate that introducing a...

Recently developed models of fairness can explain a wide variety of seemingly contradictory facts. The most controversial and yet unresolved issue in the modeling of fairness preferences concerns the behavioral relevance of fairness intentions. Intuitively, fairness intentions seem to play an...

All known human societies establish social order by punishing violators of social norms. However, little is known about how the brain processes the punishment threat associated with norm violations. We use fMRI to study the neural circuitry behind social norm compliance by comparing a treatment...

Promises are one of the oldest human-specific psychological mechanisms fostering cooperation and trust. Here, we study the neural underpinnings of promise keeping and promise breaking. Subjects first make a promise decision (promise stage), then they anticipate whether the promise affects the...

Trust and betrayal of trust are ubiquitous in human societies. Recent behavioral evidence shows that the neuropeptide oxytocin increases trust among humans, thus offering a unique chance of gaining a deeper understanding of the neural mechanisms underlying trust and the adaptation to breach of...

Studying social behavior often requires the simultaneous interaction of many subjects. As yet, however, no painless, noninvasive brain stimulation tool existed that allowed the simultaneous affection of brain processes in many interacting subjects. Here we show that transcranial direct current...