Contributions published at Microeconomics and Experimental Economic Research (Ernst Fehr)

Ein grundlegenderes Verständnis der peripheren okulomotorischen Pathophysiologie könnte zur Verbesserung der Strabismuschirurgie beitragen. Konventionelle strabologische Untersuchungsmethoden sind hilfreich, um Augenmotilitätsstörungen zu erkennen. Dennoch ist in komplexen Fällen eine präzise Diagnose mit den pathophysiologischen Erkenntnissen, die durch diese Untersuchungen und mit einem quasi agonist-antagonist extraokular Muskel-Modell gegeben sind, nicht möglich; besonders nach einer Chirurgie der extraokularen Muskeln, welcher sich das okulomotorische System anpasst. Das Problem liegt in der Verbindung von Daten der dynamischen Augenbewegung mit statischen Orbitagewebe-Konformationen. Das unvollständige Verständnis der Umwandlung der neuronalen Steuerungssignale in mechanische Augenbewegungen provozierte eine jahrzehntelange Kontroverse über die aktive oder passive Rolle des orbitalen Bindegewebes, die noch geklärt werden muss. Momentan stehen keine geeigneten dynamischen Daten zur Beurteilung des orbitalen Gewebeverhaltens zur Verfügung, selbst wenn dynamische (Un-)Gleichgewichte existieren, wie z.B. bei Verletzungen des Listingschen Gesetzes während schnellen Augenbewegungen, in bestimmten Fällen. Dies hat, zusammen mit der Komplexität der orbitalen Biomechanik, die Entwicklung eines angemessenen neuro-biomechanischen Orbitamodells verzögert. Gleichzeitige hohe räumliche und zeitliche Auflösung der Kinetik des Orbitalgewebes während der Augenbewegung würde die Umwandlung des neuronalen Signals in eine mechanische Wirkung besser beschreiben. Daraus ergeben sich die Ziele dieser Arbeit: Erstens soll ein klinisch benutzbarer visueller Reiz entwickelt werden, welcher periodisch wiederholende Augenbewegungen im Inneren des Scanners erzeugt. Damit sollen segmentierte Magnetresonanz-Bilder (MR-Bilder) ohne Bewegungsartefakte in einer genügend kurzen Zeit synchron aufgenommen werden. Zweitens soll die Bildaufnahme mit Hilfe von TFEPI durch Wahl eines reduziertes Sichtfeldes (FOV) und k-t BLAST beschleunigt werden. Drittens soll die Bewegung (CDENSE, CSPAMM) und Geschwindigkeit (Q-Flow) direkt in Bilder der Augenhöhlen kodiert werden, um zusätzliche Bewegungsdaten in der begrenzten Aufnahmezeit zu liefern. Viertens ist die dynamische Verformung der Orbitagewebe durch neue, bildrauschresistente, modellfreie Methoden zu quantifizieren. Weiter war die Messung der (vermuteten) inhomogenen Kontraktion entlang den Augenmuskeln und die Differenzierung der normalen gegenüber der pathologischen Deformation während den Augenbewegungen ein wichtiges Ziel. Diese neue Messgrößen der Augenhöhlenmechanik und deren Steuerung sollten das Verständnis der Strabismusätiologie verbessern. Die ersten hoch aufgelösten anatomischen, bewegungs- und geschwindigkeitskodierten Bilder der Deformationsdynamik der Augenhöhlen wurden mit der beschriebenen Methode erfolgreich aufgenommen. Dreidimensionale anatomische und bewegungskodierte MR-Bilder konnten mit hoher räumlicher und zeitlicher Auflösung in weniger als 10 Minuten durch eine Beschleunigung der Bildaufnahme gewonnen werden. Die Verformung des Orbitagewebes während der Augenbewegung konnte quantifiziert werden. Zum ersten Mal konnten die räumlich-zeitlichen Verformungsmuster des Glaskörpers visualisiert und viskoelastische Modellparameter quantifiziert werden. Verschiedene Arten von Deformationsmustern des Glaskörpers konnten beschrieben werden. Die Viskosität und Elastizität des Glaskörpers wurden durch ein viskoelastisches Modell bestimmt. Somit sind relevante Modellierungsparameter der Augenhöhlebiomechanik in vivo quantifiziert worden. Die Differenzierung des dynamischen Deformationsprofils entlang der Augenmuskeln von Duane-Syndrom Patienten gegenüber physiologischen Deformationsprofilen erlaubte die nicht funktionellen Segmente der pathologischen Muskeln zu bestimmen und lieferte neue Einblicke in die okulomotorische Steuerung. Das erweiterte Verständnis der Physiologie des Orbitagewebes und deren neuronalen Kontrollmechanismen könnte bisher unerkannte Ursachen des Schielens klären, welche traditionelle Konzepte verbessern oder alternative Behandlungen vorschlagen könnten. Die Ursachen von Krankheiten wie neuronal bedingte Lähmung, verzögerte neuromuskuläre Übertragung, mechanische Beschränkung und Entzündung der Augenmuskeln voneinander zu differenzieren kann jetzt geplant werden.

A large body of empirical evidence documents that people systematically violate the key axioms of the standard economic theories of choice over time and choice under risk. In response to the evidence, new models have been developed, incorporating hyperbolic time preferences or nonlinear probability weights. These models constitute pronounced departures from standard theory, and, as a consequence, are associated with several practical issues. They often fail at predicting more than one important empirical regularity and, hence, are not able to provide a unifying explanation for anomalous behavior in intertemporal and risky choice. Motivated by these deficiencies, this thesis shows that environmental factors, such as liquidity constraints or inherent uncertainty, can bridge the gap between standard economic theory and effectively observed behavior. Anomalously-looking behavior may not necessarily be caused by exotic preferences, but can naturally arise from decision makers' rational responses to their environments. The predictions made by this approach dovetail nicely with existing empirical findings. Experimental data further support the theory's main conjectures and illustrate that it indeed has significant explanatory power. The results presented have important implications for the design of proper policy interventions and the state of standard economic theory in general.

How do we make decisions when confronted with several alternatives (e.g., on a supermarket shelf)? Previous work has shown that accumulator models, such as the drift-diffusion model, can provide accurate descriptions of the psychometric data for binary value-based choices, and that the choice process is guided by visual attention. However, the computational processes used to make choices in more complicated situations involving three or more options are unknown. We propose a model of trinary value-based choice that generalizes what is known about binary choice, and test it using an eye-tracking experiment. We find that the model provides a quantitatively accurate description of the relationship between choice, reaction time, and visual fixation data using the same parameters that were estimated in previous work on binary choice. Our findings suggest that the brain uses similar computational processes to make binary and trinary choices.

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Recent evidence indicates that priming participants with religious concepts promotes prosocial sharing behaviour. In the present study, we investigated whether religious priming also promotes the costly punishment of unfair behaviour. A total of 304 participants played a punishment game. Before the punishment stage began, participants were subliminally primed with religion primes, secular punishment primes or control primes. We found that religious primes strongly increased the costly punishment of unfair behaviours for a subset of our participants—those who had previously donated to a religious organization. We discuss two proximate mechanisms potentially underpinning this effect. The first is a ‘supernatural watcher’ mechanism, whereby religious participants punish unfair behaviours when primed because they sense that not doing so will enrage or disappoint an observing supernatural agent. The second is a ‘behavioural priming’ mechanism, whereby religious primes activate cultural norms pertaining to fairness and its enforcement and occasion behaviour consistent with those norms. We conclude that our results are consistent with dual inheritance proposals about religion and cooperation, whereby religions harness the byproducts of genetically inherited cognitive mechanisms in ways that enhance the survival prospects of their adherents.

Ending violent international conflicts requires understanding the causal factors that perpetuate them. In the Israeli–Palestinian conflict, Israelis and Palestinians each tend to see themselves as victims, engaging in violence only in response to attacks initiated by a fundamentally and implacably violent foe bent on their destruction. Econometric techniques allow us to empirically test the degree to which violence on each side occurs in response to aggression by the other side. Prior studies using these methods have argued that Israel reacts strongly to attacks by Palestinians, whereas Palestinian violence is random (i.e., not predicted by prior Israeli attacks). Here we replicate prior findings that Israeli killings of Palestinians increase after Palestinian killings of Israelis, but crucially show further that when nonlethal forms of violence are considered, and when a larger dataset is used, Palestinian violence also reveals a pattern of retaliation: (i) the firing of Palestinian rockets increases sharply after Israelis kill Palestinians, and (ii) the probability (although not the number) of killings of Israelis by Palestinians increases after killings of Palestinians by Israel. These findings suggest that Israeli military actions against Palestinians lead to escalation rather than incapacitation. Further, they refute the view that Palestinians are uncontingently violent, showing instead that a significant proportion of Palestinian violence occurs in response to Israeli behavior. Well-established cognitive biases may lead participants on each side of the conflict to underappreciate the degree to which the other side's violence is retaliatory, and hence to systematically underestimate their own role in perpetuating the conflict.

A large body of experimental research has demonstrated that, on average, people violate the axioms of expected utility theory as well as of discounted utility theory. In particular, aggregate behavior is best characterized by probability distortions and hyperbolic discounting. But is it the same people who are prone to these behaviors? Based on an experiment with salient monetary incentives we demonstrate that there is a strong and significant relationship between greater departures from linear probability weighting and the degree of decreasing discount rates at the level of individual behavior. We argue that this relationship can be rationalized by the uncertainty inherent in any future event, linking discounting behavior directly to risk preferences. Consequently, decreasing discount rates may be generated by people's proneness to probability distortions.

BACKGROUND: There is ample evidence that a subgroup of Parkinson's disease patients who are treated with dopaminergic drugs develop certain behavioral addictions such as pathological gambling. The fact that only a subgroup of these patients develops pathological gambling suggests an interaction between dopaminergic drug treatment and individual susceptibility factors. These are potentially of genetic origin, since research in healthy subjects suggests that vulnerability for pathological gambling may be linked to variation in the dopamine receptor D4 (DRD4) gene. Using a pharmacogenetic approach, we investigated how variation in this gene modulates the impact of dopaminergic stimulation on gambling behavior in healthy subjects. METHODS: We administered 300 mg of L-dihydroxyphenylalanine (L-DOPA) or placebo to 200 healthy male subjects who were all genotyped for their DRD4 polymorphism. Subjects played a gambling task 60 minutes after L-DOPA administration. RESULTS: Without considering genetic information, L-DOPA administration did not lead to an increase in gambling propensity compared with placebo. As expected, however, an individual's DRD4 polymorphism accounted for variation in gambling behavior after the administration of L-DOPA. Subjects who carry at least one copy of the 7-repeat allele showed an increased gambling propensity after dopaminergic stimulation. CONCLUSIONS: These findings demonstrate that genetic variation in the DRD4 gene determines an individual's gambling behavior in response to a dopaminergic drug challenge. They may have implications for the treatment of Parkinson's disease patients by offering a genotype approach for determining individual susceptibilities for pathological gambling and may also afford insights into the vulnerability mechanisms underlying addictive behavior.

Well-functioning groups enforce social norms that restrain opportunism, but the social structure of a society may encourage or inhibit norm enforcement. Here we study how the exogenous assignment to different positions in an extreme social hierarchy – the caste system – affectsnindividuals’ willingness to punish violations of a cooperation norm. Although we control for individual wealth, education, and political participation, low caste individuals exhibit a muchnlower willingness to punish norm violations that hurt members of their own caste, suggesting a cultural difference across caste status in the concern for members of one’s own community. Thenlower willingness to punish may inhibit the low caste’s ability to sustain collective action and so may contribute to its economic vulnerability .

Both biosociological and psychological models, as well as animal research, suggest that testosterone has a key role in social interactions. Evidence from animal studies in rodents shows that testosterone causes aggressive behaviour towards conspecifics. Folk wisdom generalizes and adapts these findings to humans, suggesting that testosterone induces antisocial, egoistic, or even aggressive human behaviours. However, many researchers have questioned this folk hypothesis, arguing that testosterone is primarily involved in status-related behaviours in challenging social interactions, but causal evidence that discriminates between these views is sparse. Here we show that the sublingual administration of a single dose of testosterone in women causes a substantial increase in fair bargaining behaviour, thereby reducing bargaining conflicts and increasing the efficiency of social interactions. However, subjects who believed that they received testosterone-regardless of whether they actually received it or not-behaved much more unfairly than those who believed that they were treated with placebo. Thus, the folk hypothesis seems to generate a strong negative association between subjects' beliefs and the fairness of their offers, even though testosterone administration actually causes a substantial increase in the frequency of fair bargaining offers in our experiment.

It has long been recognized that there is considerable heterogeneity in individual risk taking behavior, but little is known about the distribution of risk taking types. We present a parsimonious characterization of risk taking behavior by estimating a finite mixture model for three different experimental data sets, two Swiss and one Chinese, over a large number of real gains and losses. We find two major types of individuals: In all three data sets, the choices of roughly 80% of the subjects exhibit significant deviations from linear probability weighting of varying strength, consistent with prospect theory. Twenty percent of the subjects weight probabilities near linearly and behave essentially as expected value maximizers. Moreover, individuals are cleanly assigned to one type with probabilities close to unity. The reliability and robustness of our classification suggest using a mix of preference theories in applied economic modeling.

How does risk tolerance vary with stake size? This important question cannot be adequately answered if framing effects, nonlinear probability weighting, and heterogeneity of preference types are neglected. We show that the observed increase in relative risk aversion over gains cannot be captured by the curvature of the value function. Rather, it is predominantly driven by a change in probability weighting of a majority group of individuals who weight probabilities of high gains more conservatively. Contrary to gains, no coherent change in relative risk aversion is observed for losses. These results not only challenge expected utility theory, but also prospect theory.

In recent decades, many firms offered more discretion to their employees, often increasing the productivity of effort but also leaving more opportunities for shirking. These “high-performance work systems” are difficult to understand in terms of standard moral hazard models. We show experimentally that complementarities between high effort discretion, rent-sharing, screening opportunities, and competition are important driving forces behind these new forms of work organization. We document in particular the endogenous emergence of two fundamentally distinct types of employment strategies. Employers either implement a control strategy, which consists of low effort discretion and little or no rent-sharing, or they implement a trust strategy, which stipulates high effort discretion and substantial rent-sharing. If employers cannot screen employees, the control strategy prevails, while the possibility of screening renders the trust strategy profitable. The introduction of competition substantially fosters the trust strategy, reduces market segmentation, and leads to large welfare gains for both employers and employees.

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Most organisms facing a choice between multiple stimuli will look repeatedly at them, presumably implementing a comparison process between the items’ values. Little is known about the nature of the comparison process in value-based decision-making or about the role of visual fixations in this process. We created a computational model of value-based binary choice in which fixations guide the comparison process and tested it on humans using eye-tracking. We found that the model can quantitatively explain complex relationships between fixation patterns and choices, as well as several fixation-driven decision biases.

Strong reciprocity is characterized by the willingness to altruistically reward cooperative acts and to altruistically punish norm-violating, defecting behaviours. Recent evidence suggests that subtle reputation cues, such as eyes staring at subjects during their choices, may enhance prosocial behaviour. Thus, in principle, strong reciprocity could also be affected by eye cues. We investigate the impact of eye cues on trustees' altruistic behaviour in a trust game and find zero effect. Neither the subjects who are classified as prosocial nor the subjects who are classified as selfish respond to these cues. In sharp contrast to the irrelevance of subtle reputation cues for strong reciprocity, we find a large effect of explicit, pecuniary reputation incentives on the trustees' prosociality. Trustees who can acquire a good reputation that benefits them in future interactions honour trust much more than trustees who cannot build a good reputation. These results cast doubt on hypotheses suggesting that strong reciprocity is easily malleable by implicit reputation cues not backed by explicit reputation incentives.

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 interaction partner's decision (anticipation stage), and are subsequently free to keep or break the promise (decision stage). Findings revealed that the breaking of the promise is associated with increased activation in the DLPFC, ACC, and amygdala, suggesting that the dishonest act involves an emotional conflict due to the suppression of the honest response. Moreover, the breach of the promise can be predicted by a perfidious brain activity pattern (anterior insula, ACC, inferior frontal gyrus) during the promise and anticipation stage, indicating that brain measurements may reveal malevolent intentions before dishonest or deceitful acts are actually committed.

Reputation formation pervades human social life. In fact, many people go to great lengths to acquire a good reputation, even though building a good reputation is costly in many cases. Little is known about the neural underpinnings of this important social mechanism, however. In the present study, we show that disruption of the right, but not the left, lateral prefrontal cortex (PFC) with low-frequency repetitive transcranial magnetic stimulation (rTMS) diminishes subjects' ability to build a favorable reputation. This effect occurs even though subjects' ability to behave altruistically in the absence of reputation incentives remains intact, and even though they are still able to recognize both the fairness standards necessary for acquiring and the future benefits of a good reputation. Thus, subjects with a disrupted right lateral PFC no longer seem to be able to resist the temptation to defect, even though they know that this has detrimental effects on their future reputation. This suggests an important dissociation between the knowledge about one's own best interests and the ability to act accordingly in social contexts. These results link findings on the neural underpinnings of self-control and temptation with the study of human social behavior, and they may help explain why reputation formation remains less prominent in most other species with less developed prefrontal cortices.