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Neuroscience, Game Theory, and Monkeys

Whether it’s determining the price of a new product, deciding how to play a poker hand, or choosing how to bid in an auction, the decisions we make depend on not only how we choose among several options, but also on the decisions of those whom we are interacting with. In each of these situations, the actions of others greatly affect our outcomes, and yet we have no clue what they are thinking. Game theory is designed to analyze the strategic decision-making that takes place as a result of this.

In his TED Talk, given at TEDxCalTech, behavioral economist Colin Camerer presents his research regarding Behavioral Game Theory, which applies Game Theory and Neuroscience to understand how people interact socially when value is at stake. Camerer’s research deviates from formalized studies of strategy in which it is assumed that “emotionless geniuses” are the players of the game. According to this theory, it must be taken into account that these players are average people with emotions and limited foresight. Camerer’s latest research is taking Behavioral Game Theory to the next level. In his talk, Camerer introduces the use of fMRI and EEG scans of people’s brains as they are engaged in strategic games. The idea is to study cognitive hierarchy, or in other words, the process of thinking and how the steps in this process are affected by a number of interesting variables and people. ¬†From this, we can make further discoveries regarding brain evolution. For example, studying brain activity might allow us to determine if a person might be a good gambler or if a person is naive and a poor decision-maker.

Camerer also presents an unexpected study that reveals that chimpanzees are better at negotiations and bargaining games than we are. The study was conducted in Nagoya, Japan at the Primate Research Institute, where two chimps were given a game to play by touching two screens and pressing left or right. One chimpanzee was given the role of “matcher”, which meant that he would win if he pressed “left, left” or “right, right”. The other chimpanzee was given the role of “mismatcher”, which meant that he would want to press the opposite way. The rewards at stake were apple cubes.

Data was collected during this game and plotted on a graph that assigned the percentage of times the matcher picked right to the x-axis and the percentage of percentage of times the mismatcher picked right to the y-axis. So a point plotted on the graph represented the behavior of a pair of players, one trying to match and the other trying to mismatch. In addition to these points, a prediction made by three different theories of Nash Equilibrium (a concept we learned in lecture) was plotted on the graph and represented the claim that the chimpanzees should match 50-50. From the plotted data, we see that the data points hover around that prediction. When compared to a graph containing human player data, the chimpanzee data graph suggests that chimpanzees play better and closer to game theory frequency (as predicted by Nash Equilibrium) than humans do. Thus, we arrive at the surprising conclusion that chimpanzees are better competitors than humans– according to game theory at least.

Sources:
http://www.ted.com/talks/colin_camerer_neuroscience_game_theory_monkeys
http://blog.ted.com/2013/03/28/further-readings-in-game-theory-how-it-applies-to-marriage-kidney-donation-chains-and-government-gridlock/
http://www.hss.caltech.edu/~camerer/Ch08Pg_119-179.pdf

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