Public Release:  NYU-Cornell study: Perceptions of morality influence economic decisions, brain responses to rewards

New York University

How we perceive another's moral character can influence the nature of our economic decisions and the neural mechanisms underlying these choices, according to a new study by researchers at New York and Cornell universities. The findings, which appear in the latest issue of the journal Nature Neuroscience, run counter to the assumptions favored by many economists that individuals behave opportunistically.

The study's researchers were Mauricio Delgado, a post-doctoral research fellow at NYU, Robert Frank, an economics professor at Cornell's Johnson School of Management, and Elizabeth A. Phelps, a professor of psychology and neural science at NYU.

In conducting the study, researchers examined brain responses while participants performed a "trust game" involving two-person interactions in which mutually beneficial outcomes are more likely if partners are trustworthy and perceive one another as such. Participants could either keep $1 on a given trial or transfer it to a partner, in which case the partner would receive $3. The partner could either keep the entire $3 or share half of it back. It was thus advantageous to transfer money to a partner who was expected to share, but disadvantageous to transfer money to one not expected to share.

Participants were instructed that they would be playing with three fictional partners and were given detailed descriptions of each partner's life events indicating praiseworthy, neutral, or suspect moral character. Participants were also told that their fictional partners' responses would not necessarily be consistent with the descriptions given. In fact, each of the three fictional partners--"good," "bad," and "neutral"--was programmed to share half the time and keep half the time.

Despite having been warned that the fictional partners' behavior might not match their descriptions, participants were initially much more willing to transfer money to good partners, and much less willing to transfer money to bad partners. But after having completed multiple trials with each type of partner, participants reported correctly that the different partners seemed to be sharing at about the same rate. Strikingly, however, participants continued to be more likely to trust good partners and less likely to trust bad ones, even though they indicated explicit knowledge that the response patterns for the different types were the same.

In mapping participants' underlying neural processes, the researchers discovered activation in the brain's striatum--more specifically, a structure called the caudate nucleus--which had previously been linked to reward processing. The brain responses matched the patterns traditionally seen during trial and error reward learning (i.e., differential responses between positive and negative feedback) only when participants were interacting with the neutral partner. In contrast, activation was either weak or absent when subjects were playing with good or bad partners.

"It was as if the influence of participants' prior impressions served to disrupt some of their normal feedback learning mechanisms and consequently affected their ability to adapt choices," explained Delgado.

The study's findings run counter to the self-interest model in economics.

"The self-interest model predicts that people should be skeptical of everyone," Frank said. "Yet people seem reluctant to adopt that posture toward someone described as trustworthy, even when they know the description is fictional."

According to Phelps, these findings suggest that "second-hand accounts of moral character can override the impact of first-hand experience of trustworthiness as expressed in both behavioral choices and the underlying neural mechanisms"


The research was supported by National Institute of Mental Health, the James S. McDonnell Foundation, the Beatrice and Samuel A. Seaver Foundation, and Cornell's S.C. Johnson School of Management.
