A large body of evidence has implicated the posterior parietal and orbitofrontal cortex in the processing of value. However, value correlates perfectly with salience when appetitive stimuli are investigated in isolation. Accordingly, considerable uncertainty has remained about the precise nature of the previously identified signals. In particular, recent evidence suggests that neurons in the primate parietal cortex signal salience instead of value. To investigate neural signatures of value and salience, here we apply multivariate (pattern-based) analyses to human functional MRI data acquired during a noninstrumental outcome-prediction task involving appetitive and aversive outcomes. Reaction time data indicated additive and independent effects of value and salience. Critically, we show that multivoxel ensemble activity in the posterior parietal cortex encodes predicted value and salience in superior and inferior compartments, respectively. These findings reinforce the earlier reports of parietal value signals and reconcile them with the recent salience report. Moreover, we find that multivoxel patterns in the orbitofrontal cortex correlate with value. Importantly, the patterns coding for the predicted value of appetitive and aversive outcomes are similar, indicating a common neural scale for appetite and aversive values in the orbitofrontal cortex. Thus orbitofrontal activity patterns satisfy a basic requirement for a neural value signal.
This paper discusses and proposes random selection as a component in decision-making in society. Random procedures have played a significant role in history, especially in classical Greece and the medieval city-states of Italy. We examine the important positive features of decisions by random Mechanisms. Random processes allow representativeness with respect to individuals and groups. They significantly reduce opportunities to influence political decisions by means of bribery and corruption and decrease the large expenses associated with today’s democratic election campaigns. Random mechanisms can be applied fruitfully to a wide range of fields, including politics, the judiciary, the economy, science and the cultural sector. However, it is important that random selection processes are embedded in appropriately designed institutions.
Any symmetric mixed-strategy equilibrium in a Tullock contest with intermediate values of the decisiveness parameter ("2 < R < ∞") has countably infinitely many mass points. All probability weight is concentrated on those mass points, which have the zero bid as their sole point of accumulation. With contestants randomizing over a non-convex set, there is a cost of being "halfhearted," which is absent from both the lottery contest and the all-pay auction. Numerical bid distributions are generally negatively skewed, and exhibit, for some parameter values, a higher probability of ex-post overdissipation than the all-pay auction.
We study a structural model of R&D alliance networks in which firms jointly form R&D collaborations to lower their production costs while competing on the product market. We derive the Nash equilibrium of this game, provide a welfare analysis and determine the optimal R&D subsidy program that maximizes total welfare. We also identify the key firms, i.e. the firms whose exit would reduce welfare the most. We then structurally estimate our model using a panel dataset of R&D collaborations and annual company reports. We use our estimates to identify the key firms and analyze the impact of R&D subsidy programs. Moreover, we analyze temporal changes in the rankings of key firms and how these changes affect the optimal R&D policy.
We identify the causal effect of house prices on mortgage demand and supply in Switzerland by exploiting exogenous shocks to immigration and thereby to house prices. Detailed micro data allow us to observe multiple offers for each mortgage request. We find a 1% increase in house prices to raise the requested mortgage amount by 0.52%. Due to positive feedback effects, the entire partial correlation is 0.78%. While we find higher house prices to increase mortgage demand, they induce banks to make fewer offers and charge higher rates, especially later in the boom and especially for highly leveraged households.
An optimal balance between efficient exploitation of available resources and creative exploration of alternatives is critical for adaptation and survival. Previous studies associated these behavioral drives with, respectively, the dopaminergic mesocorticolimbic system and frontopolar-intraparietal networks. We study the activation of these systems in two age and gender-matched groups of experienced decision-makers differing in prior professional background, with the aim to understand the neural bases of individual differences in decision-making efficiency (performance divided by response time). We compare brain activity of entrepreneurs (who currently manage the organization they founded based on their venture idea) and managers (who are constantly involved in making strategic decisions but have no venture experience) engaged in a gambling-task assessing exploitative vs. explorative decision-making. Compared with managers, entrepreneurs showed higher decision-making efficiency, and a stronger activation in regions of frontopolar cortex (FPC) previously associated with explorative choice. Moreover, activity across a network of regions previously linked to explore/exploit tradeoffs explained individual differences in choice efficiency. These results suggest new avenues for the study of individual differences in the neural antecedents of efficient decision-making.
This paper analyzes responsibility attributions for outcomes of collective decision making processes. In particular, we ask if decision makers are blamed for being pivotal if they implement an unpopular outcome in a sequential voting process. We conduct an experimental voting game in which decision makers vote about the allocation of money between themselves and recipients without voting rights. We measure responsibility attributions for voting decisions by eliciting the monetary punishment that recipients assign to individual decision makers. We find that pivotal decision makers are punished significantly more for an unpopular voting outcome than non-pivotal decision makers. Our data also suggest that some voters avoid being pivotal by voting strategically in order to delegate the pivotal vote to subsequent decision makers.
We study the effectiveness of leaders for inducing coordinated organizational change to a more efficient equilibrium, i.e., a turnaround. We compare communication from leaders to incentive increases and also compare the effectiveness of randomly selected and elected leaders. While all interventions yield shifts to more efficient equilibria, communication from leaders has a greater effect than incentives. Moreover, leaders who are elected by followers are significantly better at improving their group’s outcome than randomly selected ones. The improved effectiveness of elected leaders results from sending more performance-relevant messages. Our results are evidence that the way in which leaders are selected affects their legitimacy and the degree to which they influence followers. Finally, we observed that a combination of factors— incentive increases and elected leaders—yield near universal turnarounds to full efficiency.
Are competitive mechanisms perceived as just sources of economic inequality? Perceptions of fairness violations can have severe economic consequences, as they may cause counterproductive behavior such as rulebook slowdowns or quality shading. To analyze fairness perceptions associated with competitive mechanisms, we run laboratory experiments where a single powerful buyer can trade with one of several sellers—an environment that can lead to pronounced inequality among the interacting parties. Once the terms of trade are determined, sellers can engage in counterproductive behavior. We robustly find that low procurement prices, which allocate most of the surplus from trade to the buyer, trigger significantly less counterproductive behavior if the buyer uses a competitive auction to determine the terms of trade than if he uses his price setting power to dictate the same terms directly. Our data demonstrate that competitive mechanisms, in addition to their capability to produce efficient allocations, can reduce conflict and inefficient reactions by increasing justification for economic inequality.
The notion of contracts as reference points provides the basis for a deeper understanding of important phenomena such as the employment contract, vertical integration, firm scope, authority and delegation. Previous experiments lend support to this notion but they ignore realistic aspects of trading relationships such as informal agreements and ex post renegotiation or revision. Here we show that the central behavioral mechanism underlying contractual reference points is robust to such considerations. Our data reveal that informal agreements can mitigate the trade-off between rigidity and flexibility but they do not fully resolve the problem of misaligned reference points. Our experiments also show that contract revision is a more nuanced process than the previous literature has recognized. We find, for example, that it is sometimes better for parties to write a simple (rigid) contract and then revise it ex post if needed, rather than to anticipate and include future contingencies in a (flexible) contract from the outset.
