This paper provides evidence for the following novel insights: (1) People’s economic decisions depend on their psychological motives, which are shaped predictably by the social context. (2) In particular, the social context influences people’s other-regarding preferences, their beliefs and their perceptions. (3) The influence of the social context on psychological motives can be measured experimentally by priming two antagonistic motives—care and anger—in one player towards another by means of an observance or a violation of a fairness norm. Using a mediation approach, we find that the care motive leads to higher levels of cooperation which are driven by more optimistic beliefs, a different perception of the game as well as by a shift towards more pro-social preferences.

We conduct a lottery experiment to assess the predictive importance of simple choice process metrics (SCPMs) in forecasting risky 50/50 gambling decisions using different types of machine learning algorithms in addition to traditional choice modeling approaches. The SCPMs are recorded during a fixed predecision phase and are derived from tracking subjects' eye movements, pupil sizes, skin conductance, and cardiovascular and respiratory signals. Our study demonstrates that SCPMs provide relevant information for predicting gambling decisions; however, we do not find forecasting accuracy to be substantially affected by adding SCPMs to standard choice data. Instead, our results show that forecasting accuracy highly depends on differences in subject-specific risk preferences and is largely driven by including information on lottery design variables. As a key result, we find evidence for dynamic changes in the predictive importance of psychophysiological responses that appear to be linked to habituation and resource-depletion effects. Subjects' willingness to gamble and choice-revealing arousal signals both decrease as the experiment progresses. Moreover, our findings highlight the importance of accounting for previous lottery payoff characteristics when investigating the role of emotions and cognitive bias in repeated decision-making scenarios.

Understanding the neural correlates of risk-sensitive skin conductance responses can provide insights into their connection to emotional and cognitive processes. To provide insights into this connection, we studied the cortical correlates of risk-sensitive skin conductance peaks using electroencephalography. Fluctuations in skin conductance responses were elicited while participants played a threat-of-shock card game. Precise temporal information about skin conductance peaks was obtained by applying continuous decomposition analysis on raw electrodermal signals. Shortly preceding skin conductance peaks, we observed a decrease in oscillatory power in the frequency range between 3 and 17 Hz in occipitotemporal cortical areas. Atlas-based analysis indicated the left lingual gyrus as the source of the power decrease. The oscillatory power averaged across 3-17 Hz showed a significant negative relationship with the skin conductance peak amplitude. Our findings indicate a possible interaction between attention and threat perception. NEW & NOTEWORTHY We studied neural oscillations associated with risk-sensitive skin conductance responses. Going beyond previous studies, we applied methods with high-temporal resolution to account for the temporal properties of the sympathetic activity. Preceding skin conductance peaks, we observed decreased occipital cortex oscillatory power and a relationship between the oscillatory power decrease and the skin conductance peak amplitude. Our study suggests an interaction between attention and emotion such as threat perception reflected in skin conductance responses.

How the provision of unemployment benefits affects employment is a debated issue. We aim at complementing theoretical and empirical contributions to this debate with a laboratory experiment. We simulate a job market with search effort and labor force participation decisions while varying the maximum length of unemployment benefit eligibility. Our results reveal two separable, opposing effects. Individuals within the labor force search with lower effort when unemployment benefits are more generous. However, individuals are more likely to participate in the labor force and to actively search for a job.

Problem gamblers discount delayed rewards more rapidly than do non-gambling controls. Understanding this impulsivity is important for developing treatment options. In this article, we seek to make two contributions: First, we ask which of the currently debated economic models of intertemporal choice (exponential versus hyperbolic versus quasi-hyperbolic) provides the best description of gamblers' discounting behavior. Second, we ask how problem gamblers differ from habitual gamblers and non-gambling controls within the most favored parametrization. Our analysis reveals that the quasi-hyperbolic discounting model is strongly favored over the other two parametrizations. Within the quasi-hyperbolic discounting model, problem gamblers have both a significantly stronger present bias and a smaller long-run discount factor, which suggests that gamblers' impulsivity has two distinct sources.

Prenatal androgens have organizational effects on brain and endocrine system development, which may have a partial impact on economic decisions. Numerous studies have investigated the relationship between prenatal testosterone and financial risk taking, yet results remain inconclusive. We suspect that this is due to difficulty in capturing risk preferences with expected utility based tasks. Prospect theory, on the other hand, suggests that risk preferences differ between gains, losses and mixed prospects, as well as for different probability levels. This study investigates the relationship between financial risk taking and 2D:4D, a putative marker of prenatal testosterone exposure, in the framework of prospect theory. We conducted our study with 350 participants of Caucasian and Asian ethnicities. We do not observe any significant relationship between 2D:4D and risk taking in either of these domains and ethnicities.

Prenatal androgens have organizational effects on brain and endocrine system development, which may have a partial impact on economic decisions. Numerous studies have investigated the relationship between prenatal testosterone and financial risk taking, yet results remain inconclusive. We suspect that this is due to difficulty in capturing risk preferences with expected utility based tasks. Prospect theory, on the other hand, suggests that risk preferences differ between gains, losses and mixed prospects, as well as for different probability levels. This study investigates the relationship between financial risk taking and 2D:4D, a putative marker of prenatal testosterone exposure, in the framework of prospect theory. We conducted our study with 350 participants of Caucasian and Asian ethnicities. We do not observe any significant relationship between 2D:4D and risk taking in either of these domains and ethnicities.

It has been observed that, in a variety of tasks, losses have a larger impact on behavior than do gains of equal size. This phenomenon is referred to as loss aversion. It is thought that the negativity bias in behavior is reflected in and potentially causally related to a negativity bias in emotional arousal. We examine skin conductance responses—a psychophysiological marker for emotional arousal—during the anticipation of gains and losses. In contrast to most previous research, gains and losses were separated from each other and symmetric in magnitude. We found that skin conductance responses during the anticipation phase increased with the magnitude of both gains and losses. Contrary to the predictions of the loss aversion hypothesis, the anticipation of a loss did not elicit stronger reactions than the anticipation of a gain of equal size.

Our society is confronted with numerous global challenges such climate change or instable financial markets. Because these challenges exceed national competencies, international cooperation and coordination are necessary to address them. In an international environment, however, it is often difficult to agree on and implement traditional and „hard" policy instruments and measures–such as legal prohibitions or financial incentives. Nudging represents an alternative approach. Nuding aims at directing human behavior in a predictable and socially desirable way by a gentle push. Currently, nudging is mainly studied and applied on a national level, but an application to global problems appears in principle possible. A discussion about such an application is missing. By weighting advantages and disadvantages of nudges on the national level, this article discusses a potential global application. From our perspective, the exposition reveals that so-called global nudges in addition to classical policy tools have the potential to play an important role in addressing global challenges.

Functional imaging studies on decision making under uncertain risk of negative (aversive) outcomes are scarce. To get a better understanding of the underlying processes, we tested models of decision making including participants that were gambling regularly despite negative long-term consequences. Primarily, we sought to detect group differences in cortical and subcortical regions involved in decision processes. Also, we wanted to investigate, if current economic decision making models account for observable physiological data. Do we process aversive contingencies of decisions in a linear or a nonlinear manner, or both? We studied 22 pathological and 18 habitual gamblers, as well as 23 control subjects, evaluated by psychologists with a semi-structured interview and self-reported Southern Oaks Gambling Scale. Participants were scanned with blood oxygenation level-dependent (BOLD) functional magnetic resonance imaging (fMRI) and engaged in a card game in which un-ambiguous situations of various risk levels for punishment (unpleasant, but not painful electric shocks) were created. Apart from neural responses to punishment, our paradigm allowed us to measure how neural activity during expectation of a punishment is modulated by the probability to be punished (risk) or the certainty of the outcome (certainty). Extending previous work and testing our hypothesis, based on economic studies, we modelled expected outcomes according to the prospect theory. Activations differed spatially when situations were modelled according to risk or certainty. With linearly increasing chances of avoiding punishment we found that the BOLD signal increased in the orbitofrontal cortex, caudate nucleus, precuneus, and the posterior cingulate cortex (Fig. 1a). Conversely, with increasing certainty of an outcome (U-shaped from most certain punishment to most certain avoidance), we could demonstrate nonlinear activations in medial superior frontal cortex, anterior cingulate cortex, anterior insula and angular gyrus (Fig. 1b). Interestingly, we found no group differences in cerebral activation during the task, which dovetailed with ‘offline’ behavioural analyses of decision making in the same groups. Our results support the notion that economic decision making contains both linear and nonlinear cognitive processes largely following contingencies for risk and certainty and provide evidence that these cognitive processes are represented in different sets of brain regions. Correlates of the risk for punishment were found in areas known to be involved in dopaminergic reinforcement learning, while regions known to sub serve decision making, conflict monitoring and punishment show correlation with certainty of the outcome. While differences in reward perception in pathological gamblers are frequently described in the literature, we found no evidence for changes in punishment perception.

Problem gambling is a serious socioeconomic problem involving high individual and social costs. In this article, we study risk preferences of problem gamblers including their risk attitudes in the gain and loss domains, their weighting of probabilities, and their degree of loss aversion. Our findings indicate that problem gamblers are systematically more risk taking and less sensitive toward changes in probabilities in the gain domain only. Neither their risk attitudes in the loss domain nor their degree of loss aversion are significantly different from the controls. Additional evidence for a similar degree of sensitivity toward negative outcomes is gained from skin conductance data—a psychophysiological marker for emotional arousal—in a threat-of-shock task.

This paper studies the impact of different outcome correlation structures on gender differences in ambiguity aversion. We conducted an investment game with two separate treatments. In the uncorrelated treatment, the outcomes of the investment game were determined individually. In the correlated treatment, the outcomes of the investment game were determined collectively within a reference group. From an evolutionary perspective, men should be more concerned about relative outcomes, because their reproductive success mainly depended on their relative standing within society. Women, by contrast, should be more concerned about absolute outcomes, because their reproductive success was mainly linked to their access to resources for themselves and their children. Therefore, we predict that the type of outcome correlation structure has a larger impact on men than on women. In particular, we hypothesize that men are less ambiguity averse under an uncorrelated outcome structure. In this situation, the ambiguous alternative should be more attractive, because it potentially reduces inequality and thereby improves men’s relative standing within society. Women’s choices should not be significantly affected by different outcome correlation structures. Both hypotheses are supported by evidence from laboratory experiments.

Previous research has investigated the effects of violence and warfare on individuals' well-being, mental health, and individual prosociality and risk aversion. This study establishes the short-and long-term effects of exposure to violence on short-term memory and aspects of cognitive control. Short-term memory is the ability to store information. Cognitive control is the capacity to exert inhibition, working memory, and cognitive flexibility. Both have been shown to affect positively individual well-being and societal development. We sampled Colombian civilians who were exposed either to urban violence or to warfare more than a decade earlier. We assessed exposure to violence through either the urban districtlevel homicide rate or self-reported measures. Before undertaking cognitive tests, a randomly selected subset of our sample was asked to recall emotions of anxiety and fear connected to experiences of violence, whereas the rest recalled joyful or emotionally neutral experiences. We found that higher exposure to violence was associated with lower short-term memory abilities and lower cognitive control in the group recalling experiences of violence, whereas it had no effect in the other group. This finding demonstrates that exposure to violence, even if a decade earlier, can hamper cognitive functions, but only among individuals actively recalling emotional states linked with such experiences. A laboratory experiment conducted in Germany aimed to separate the effect of recalling violent events from the effect of emotions of fear and anxiety. Both factors had significant negative effects on cognitive functions and appeared to be independent from each other.

The authors identify three challenges to global cooperation and propose three solutions. The first is the lack of integration of civil society into global governance. In the spirit of Ostrom's poly-centric governance, they propose stronger interaction between public international authorities, including the G20, and civil society. The second is the reliance of economic policy on a model of human behaviour based on self-interest and instrumental rationality. The authors propose on the contrary to ground policies on behavioural evidence, and to increase cooperation between academic institutions active in this field worldwide. The third is the recognition that the spread of divisive narratives, which emphasize demarcations across national or religious lines, hinders global cooperation. Alternative narratives should be produced within a transformative process involving responsible leaders, decision-makers, experts, and civil society.

This paper contributes to a better understanding of the biological underpinnings of overconfidence by analyzing performance predictions in the Cognitive Reflection Test with and without monetary incentives. In line with the existing literature we find that the participants are too optimistic about their performance on average; incentives lead to higher performance; and males score higher than females on this particular task. The novelty of this paper is an analysis of the relation between participants’ performance prediction accuracy and their second to fourth digit ratio. It has been reported that the digit ratio is a negatively correlated bio-marker of prenatal testosterone exposure. In the unincentivized treatment, we find that males with low digit ratios, on average, are significantly more overconfident about their performance. In the incentivized treatment, however, we observe that males with low digit ratios, on average, are less overconfident about their performance. These effects are not observed in females. We discuss how these findings fit into the literature on testosterone and decision making and how they might help to explain seemingly opposing evidence.

This paper studies performance predictions in the 7-item Cognitive Reflection Test (CRT) and whether they differ by gender. After participants completed the CRT, they predicted their own (i), the other participants’ (ii), men’s (iii), and women’s (iv) number of correct answers. In keeping with existing literature, men scored higher on the CRT than women and both men and women were too optimistic about their own performance. When we compare gender-specific predictions, we observe that men think they perform significantly better than other men and do so significantly more than women. The equality between women’s predictions about their own performance and their female peers cannot be rejected. Our findings contribute to the growing literature on the underpinnings of behavior in economics and in psychology by uncovering gender differences in confidence about one’s ability relative to same and opposite sex peers.

This study investigates the connection between mindfulness and prenatal testosterone exposure and explores whether this is related to the relationship between mindfulness and human well-being as captured by three separate measures. In a sample of 90 German student participants, we find that subjects' digit ratio - a reliable indicator for exposure to prenatal testosterone - predicts their Mindful Attention Awareness Scale (MAAS) scores. Respondents with moderate levels of testosterone exposure have the highest MAAS scores. We additionally elicit participants' self-reported general life satisfaction and current happiness levels as well as their estimates about others' general life satisfaction. We find that MAAS strongly predicts absolute and relative life satisfaction and also current happiness levels, but digit ratios do not mediate the relationship between human well-being and mindfulness.

Human judgment and decision-making (JDM) requires an assessment of different choice options. While traditional theories of choice argue that cognitive processes are the main driver to reach a decision, growing evidence highlights the importance of emotion in decision-making. Following these findings, it appears relevant to understand how individuals asses the attractiveness or riskiness of a situation in terms of emotional processes. The following study aims at a better understanding of the psychophysiological mechanisms underlying threat sensitivity by measuring skin conductance responses (SCRs) in passive threat situations. While previous studies demonstrate the role of magnitude on emotional body reactions preceding an outcome, this study focuses on probability. In order to analyze emotional body reactions preceding negative events with varying probability of occurrence, we have our participants play a two-stage card game. The first stage of the card game reveals the probability of receiving an unpleasant electric shock. The second stage applies the electric shock with the previously announced probability. For the analysis, we focus on the time interval between the first and second stage. We observe a linear relation between SCRs in anticipation of receiving an electric shock and shock probability. This finding indicates that SCRs are able to code the likelihood of negative events. We outline how this coding function of SCRs during the anticipation of negative events might add to an understanding of human JDM.

Individuals often rely on simple heuristics when they face complex choice situations under uncertainty. Traditionally, it has been proposed that cognitive processes are the main driver to evaluate different choice options and to finally reach a decision. Growing evidence, however, highlights a strong interrelation between judgment and decision-making (JDM) on the one hand, and emotional processes on the other hand. This also seems to apply to judgmental heuristics, i.e., decision processes that are typically considered to be fast and intuitive. In this study, participants are exposed to different probabilities of receiving an unpleasant electric shock. Information about electric shock probabilities is either positively or negatively framed. Integrated skin conductance responses (ISCRs) while waiting for electric shock realization are used as an indicator for participants' emotional arousal. This measure is compared to objective probabilities. I find evidence for a relation between emotional body reactions measured by ISCRs and the framing effect. Under negative frames, participants show significantly higher ISCRs while waiting for an electric shock to be delivered than under positive frames. This result might contribute to a better understanding of the psychological processes underlying JDM. Further studies are necessary to reveal the causality underlying this finding, i.e., whether emotional processes influence JDM or vice versa.