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Please use this identifier to cite or link to this item: http://hdl.handle.net/10481/31568

Title: The neural basis of bounded rational behavior
Authors: Coricelli, Giorgio
Nagel, Rosemari
Issue Date: 2010
Abstract: Bounded rational behaviour is commonly observed in experimental games and in real life situations. Neuroeconomics can help to understand the mental processing underlying bounded rationality and out-of-equilibrium behaviour. Here we report results from recent studies on the neural basis of limited steps of reasoning in a competitive setting – the beauty contest game. We use functional magnetic resonance imaging (fMRI) to study the neural correlates of human mental processes in strategic games. We apply a cognitive hierarchy model to classify subject’s choices in the experimental game according to the degree of strategic reasoning so that we can identify the neural substrates of different levels of strategizing. We found a correlation between levels of strategic reasoning and activity in a neural network related to mentalizing, i.e. the ability to think about other’s thoughts and mental states. Moreover, brain data showed how complex cognitive processes subserve the higher level of reasoning about others. We describe how a cognitive hierarchy model fits both behavioural and brain data.
Publisher: Universidad de Granada. Departamento de Teoría e Historia Económica
Series/Report no.: The Papers;10/11
Keywords: Game theory
Bounded rationality
Neuroeconomics
URI: http://hdl.handle.net/10481/31568
Rights : Creative Commons Attribution-NonCommercial-NoDerivs 3.0 License
Citation: Coricelli, G.; Nagel, R. The neural basis of bounded rational behavior. Universidad de Granada. Departamento de Teoría e Historia Económica (2010). (The Papers; 10/11). [http://hdl.handle.net/10481/31568]
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