This paper analyzes the impact of wage comparisons among inequity-averse agents on optimal incentive intensities in a linear–exponential–normal moral hazard model with multi-tasking. We consider individual and team production tasks that differ in that only individual production causes wage inequality. If the tasks are substitutes in the agents’ effort cost functions, the principal might want to balance incentives and reduce the agents’ overall inequality exposure. We show that team production incentives can then be muted below the level that results from noisy measurement and risk aversion alone—even though team production does not cause wage inequality.
We investigated behavioral and neurobiological mechanisms by which risk-averse advice,provided by an expert, affected risky decisions across three developmental groups [earlyadolescents (12-14 years), late adolescents (15-17 years), adults (18+ years)]. Using cumulativeprospect theory, we modeled choice behavior during a risky-choice task. Results indicate thatadvice had a significantly greater impact on risky choice in both adolescent groups than in adults.Using functional magnetic resonance imaging, we investigated the neural correlates of thisbehavioral effect. Developmental effects on correlations between brain activity and valuationparameters were obtained in regions that can be classified into (i) cognitive control regions, such asdorsolateral prefrontal cortex (DLPFC) and ventrolateral PFC; (ii) social cognition regions, such asposterior temporoparietal junction; and (iii) reward-related regions, such as ventromedial PFC(vmPFC) and ventral striatum. Within these regions, differential effects of advice on neuralcorrelates of valuation were observed across development. Specifically, advice increased thecorrelation strength between brain activity and parameters reflective of safe choice options inadolescent DLPFC and decreased correlation strength between activity and parameters reflective ofrisky choice options in adult vmPFC. Taken together, results indicate that, across development,distinct brain systems involved in cognitive control and valuation mediate the risk-reducing effectof advice during decision making under risk via specific enhancements and reductions of thecorrelation strength between brain activity and valuation parameters.
Human altruism shaped our evolutionary history and pervades social and political life. There are,however, enormous individual differences in altruism. Some people are almost completely selfish,while others display strong altruism, and the factors behind this heterogeneity are only poorlyunderstood. We examine the neuroanatomical basis of these differences with voxel-basedmorphometry and show that gray matter (GM) volume in the right temporoparietal junction (TPJ)is strongly associated with both individuals' altruism and the individual-specific conditions underwhich this brain region is recruited during altruistic decision making. Thus, individual differencesin GM volume in TPJ not only translate into individual differences in the general propensity tobehave altruistically, but they also create a link between brain structure and brain function byindicating the conditions under which indi
