We recently had to make a large (really large) purchase—a condominium. What went through my mind in making the bid? This question, in a more general sense, is the subject of a new field—psychoeconomics and neuroeconomics. In 2002, Daniel Kahneman, of Princeton and the Hebrew University, received the Nobel Prize in Economics “for having integrated insights from psychological research into economic science, especially concerning human judgment and decision-making under uncertainty.”
So I put myself on the couch and pretended to be Prof. Kahneman. What was I thinking when I made the bid?
Here are my thoughts when I saw the asking price: no @#$% way! After all, the real estate market is crumbling. On the other hand, not in this town… On the other hand, I am going to feel like an idiot paying the asking price, although it was actually quite reasonable… On the other hand, the sellers are loaded, they don’t even live in the condo, a low bid will probably not faze them… On the other hand, if I come with a really low-ball offer, I may push them to respond emotionally (i.e., become insulted and angry) and cut off the negotiation. You get the point: Negotiation is a complex psychological process, and neuroscience wants to understand it.
The neural basis of decision-making
Exactly five years ago, a paper in Science, bearing the above title, explored the neurological brain circuits that are involved in economic decision-making. They used two well-known techniques: functional magnetic resonance imaging (fMRI) to investigate neural substrates of cognitive and emotional processes involved in economic decision-making, and the Ultimatum Game. In the Ultimatum Game, two players are offered a chance to win a certain sum of money. All they must do is divide it. The proposer suggests how to split the sum. The responder can accept or reject the deal. If the deal is rejected, neither player gets anything. The rational solution, suggested by game theory, is for the proposer to offer the smallest possible share and for the responder to accept it. If humans play the game, however, the most frequent outcome is a fair share. Unfair offers elicit activity in brain areas related to both emotion (anterior insula, INS) and cognition (dorsolateral prefrontal cortex, DLPFC).
The investigators scanned players as they responded to fair and unfair proposals. Indeed, unfair offers elicited increased activity in the anterior insula, as expected. This suggests an important role for emotions in decision-making, a nice confirmation of what we knew all along: There is an emotional component in any negotiation, and the perception of unfairness tends to increase the role of emotions, at the expense of rational analysis.
Better life through chemistry
This study provided the anatomical locations where decision-making takes place. But what about function? What makes these neurological circuits come to life and contribute to decision-making? Knowing how things happen is in a way even more important than knowing where they happen. We know, for instance, that neurons communicate with each other through chemicals called neurotransmitters. So it would be nice to identify the neurotransmitters involved in decision-making. Once we understand how things work, or which chemicals are involved, it allows us to intervene, to modulate and modify the process. This remained unknown until a publication in Science magazine this month shed light on the mystery. In a paper titled, “Serotonin Modulates Behavioral Reactions to Unfairness,” scientists from Cambridge University in the U.K. found that serotonin (5 hydroxytryptamine, or 5HT) is it!
Serotonin has long been implicated in social behavior and impulsivity, but the mechanisms through which it modulates self-control remain unclear. The Cambridge scientists observed the effects of manipulating serotonin function on behavior in the Ultimatum Game. Normally, if the first player proposes to keep the lion’s share for himself, the second player will accept the deal about 50% of the time. He may resent the inequity, but he realizes that a small share is better than nothing. In this experiment, half the participants had low serotonin levels, and half had normal levels. Participants with depleted serotonin levels rejected 80% of unfair, but not fair offers. You would guess they were depressed, or cranky; but no, they were not; they showed no changes in mood or fairness judgments. “Lower levels of serotonin selectively alter reactions to unfairness… [it] increased retaliation to perceived unfairness,” concluded the authors. Or more generally, these results suggest that serotonin plays a critical role in regulating emotion during social decision-making.
Can brain serotonin levels be increased?
Serotonin (5 HT) is secreted by a neuron (called presynaptic neuron) into the space (synapse) between it and the adjacent neuron (the postsynaptic neuron). The serotonin in the synapse is taken up by the postsynaptic neuron and metabolized. This is how the nervous system maintains a constant level of serotonin. Various agents can raise the level of serotonin in the brain through inhibition of serotonin reuptake by postsynaptic neurons. These include MDMA (ecstasy), amphetamine, cocaine, dextromorphan (an antitussive or anti-cough agent), tricyclic antidepressant (TCAs), like valium, and selective serotonin reuptake inhibitors (SSRIs), like Prozac and Paxil.
The three-martini lunch and more
So, now we can begin to understand the concept of a “business lunch”. Food and alcohol stimulate the reward circuits in the brain, and serotonin is one of the neurotransmitters involved. Everybody is in an agreeable frame of mind, anger is muted, and negotiations flow smoothly. Even weighty life-and-death decisions could be affected. Could have Osama bin Laden been a nicer person had his religion permit something stronger than yogurt? Could the course of history have changed had Bush-Cheney-Rumsfeld had a pleasant three-martini lunch before deciding to go to war? Should we pass a constitutional amendment barring teetotalers from the presidency? All important questions that, as scientists are fond of saying, require further study.
Oh yes, that condo negotiation? Our offer was accepted as is, no counter-offer. My initial reaction was surprise and elation. On the other hand, did we offer too much?… On the other hand, had we offered a lower price would we have made them angry?… On the other hand…
A glass of wine resolved all my doubts: We are simply great negotiators.