The neural basis of bounded rational behavior Coricelli, Giorgio Nagel, Rosemari Game theory Bounded rationality Neuroeconomics 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. 2014-05-06T06:36:38Z 2014-05-06T06:36:38Z 2010 info:eu-repo/semantics/report 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] http://hdl.handle.net/10481/31568 eng The Papers;10/11 http://creativecommons.org/licenses/by-nc-nd/3.0/ info:eu-repo/semantics/openAccess Creative Commons Attribution-NonCommercial-NoDerivs 3.0 License Universidad de Granada. Departamento de Teoría e Historia Económica