What Happens in the Brain when Negotiating about Money
In this scientific article titled “The Neural Basis of Economic Decision-Making in the Ultimatum Game”, Sanfey et al. discuss a study they conducted where the brains of nineteen participants were scanned as they played the ultimatum game. As we learned in class, this game involves negotiating about money. During each iteration of the game, two participants, Person A and B, were asked to split an amount of money. Person A made and offer and Person B decided whether to accept or reject it. If Person B declined the offer, nobody would receive the money. We learned in class that the logical decision for Person B would be to accept any offer, as it is better to make some money than none at all. In this study, about fifty percent of low offers were rejected by Person B, as they felt insulted with the low offers. This finding is consistent with what we discussed in class i.e. Person B would rather punish Person A than make a few dollars themselves.
What makes this study interesting is that Sanfey et al. examined what neural events were happening to the brain leading up to this decision. Functional magnetic resonance imaging (fMRI) techniques were used to image the brain during these transactions. They found that when Person B receives a proposal on how to split the money, the dorsolateral pre-frontal cortex is activated. This region of the brain is responsible for helping us solve complex problems and making us self-aware, reflective beings. However, when Person B was offered an unfair proposal, the anterior insula region of their brain was activated. This region of the brain is responsible for inducing emotions. Specifically, when this region of the brain is activated we feel anxiety and pain. Hence, it is no surprise that when Person B receives a low offer, he or she tends to decline. What this study shows is that real people’s payoffs are not well modeled by strict money-maximization. The truth of the matter is, people are not robots and we receive some type of emotional payoff that must be taken into account, especially when negotiating with money.