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Cognitive Control and Individual Differences in Economic Ultimatum Decision-Making

Author

Listed:
  • Wim De Neys
  • Nikolay Novitskiy
  • Leen Geeraerts
  • Jennifer Ramautar
  • Johan Wagemans

Abstract

Much publicity has been given to the fact that people's economic decisions often deviate from the rational predictions of standard economic models. In the classic ultimatum game, for example, most people turn down financial gains by rejecting unequal monetary splits. The present study points to neglected individual differences in this debate. After participants played the ultimatum game we tested for individual differences in cognitive control capacity of the most and least economic responders. The key finding was that people who were higher in cognitive control, as measured by behavioral (Go/No-Go performance) and neural (No-Go N2 amplitude) markers, did tend to behave more in line with the standard models and showed increased acceptance of unequal splits. Hence, the cognitively highest scoring decision-makers were more likely to maximize their monetary payoffs and adhere to the standard economic predictions. Findings question popular claims with respect to the rejection of standard economic models and the irrationality of human economic decision-making.

Suggested Citation

  • Wim De Neys & Nikolay Novitskiy & Leen Geeraerts & Jennifer Ramautar & Johan Wagemans, 2011. "Cognitive Control and Individual Differences in Economic Ultimatum Decision-Making," PLOS ONE, Public Library of Science, vol. 6(11), pages 1-9, November.
  • Handle: RePEc:plo:pone00:0027107
    DOI: 10.1371/journal.pone.0027107
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    References listed on IDEAS

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    1. Burnham, Terence C. & Cesarini, David & Johannesson, Magnus & Lichtenstein, Paul & Wallace, Björn, 2009. "Higher cognitive ability is associated with lower entries in a p-beauty contest," Journal of Economic Behavior & Organization, Elsevier, vol. 72(1), pages 171-175, October.
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    Cited by:

    1. Misato Inaba & Yumi Inoue & Satoshi Akutsu & Nobuyuki Takahashi & Toshio Yamagishi, 2018. "Preference and strategy in proposer’s prosocial giving in the ultimatum game," PLOS ONE, Public Library of Science, vol. 13(3), pages 1-15, March.
    2. Chiara Scarampi & Richard Fairchild & Luca Fumarco & Alberto Palermo & Neal Hinvest, 2021. "Social Metacognition: A Correlational Device for Strategic Interactions," Working Papers 2111, Tulane University, Department of Economics.
    3. Dustin P. Calvillo & Jessica N. Burgeno, 2015. "Cognitive reflection predicts the acceptance of unfair ultimatum game offers," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 10(4), pages 332-341, July.
    4. Ennio Bilancini & Leonardo Boncinelli & Lorenzo Spadoni, 2020. "Motivating Risky Choices Increases Risk Taking," Working Papers CESARE 1/2020, Dipartimento di Economia e Finanza, LUISS Guido Carli.
    5. Ralf Morgenstern & Marcus Heldmann & Bodo Vogt, 2014. "Differences in cognitive control between real and hypothetical payoffs," Theory and Decision, Springer, vol. 77(4), pages 557-582, December.
    6. Markus Seier, 2020. "The Intuition of Punishment: A Study of Fairness Preferences and Cognitive Ability," Games, MDPI, vol. 11(2), pages 1-25, May.
    7. Alison Harris & Aleena Young & Livia Hughson & Danielle Green & Stacey N Doan & Eric Hughson & Catherine L Reed, 2020. "Perceived relative social status and cognitive load influence acceptance of unfair offers in the Ultimatum Game," PLOS ONE, Public Library of Science, vol. 15(1), pages 1-18, January.
    8. repec:cup:judgdm:v:10:y:2015:i:4:p:332-341 is not listed on IDEAS

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