The Strategizing Brain: Game Theory, Neuroscience, and Unexpected Insights from Monkeys

What happens in our brains when we're trying to make a deal, whether we're competing or cooperating? Behavioral economist Colin Camerer explores this question using a combination of game theory and neuroscience, revealing surprising insights into our strategic thinking and social interactions.

Game theory, originally a branch of applied mathematics, provides a framework for understanding social life. It predicts how people will behave and what they'll believe others will do in situations where everyone's actions affect each other. This includes:

Competition
Cooperation
Bargaining
Games like hide-and-seek and poker

The Two-Thirds Game

Consider a simple game: everyone chooses a number from 0 to 100. The winner is whoever picks a number closest to two-thirds of the average. This game serves as a model for scenarios like selling in the stock market – you want to sell early enough to secure profits but not so early that you miss out on potential gains.

Two main theories explain how people approach this game:

Non-Strategic Thinking: Some people assume the average will be 50 and choose two-thirds of that (33).
Cognitive Hierarchy: Others take it a step further, anticipating that others will pick 33 and choosing two-thirds of that (22). This involves more working memory and deeper strategic thinking.

John Nash, of A Beautiful Mind fame, proposed the concept of equilibrium analysis. In this framework, everyone has perfectly anticipated everyone else's actions. In the two-thirds game, equilibrium suggests everyone would choose zero. However, behavioral data often contradicts this prediction.

Behavioral Data: Spikes and Strategic Thinking

In a study involving 9,000 participants, people were asked to submit their numbers in a newspaper contest, with the winner being closest to two-thirds of the average. The data revealed distinct spikes around 33 and 22, indicating that many people were indeed employing one or two steps of strategic thinking. Some even picked zero or one, seemingly attempting to play the equilibrium strategy, but ultimately losing out.

Neuroscience: Unveiling the Brain's Strategic Circuitry

Using fMRI, researchers scanned participants' brains as they played the two-thirds game against either another person or a computer. When playing against another person, there was increased activity in brain regions associated with theory of mind, including:

Medial prefrontal cortex
Dorsomedial prefrontal cortex
Ventromedial prefrontal cortex
Anterior cingulate cortex
Right and left temporal parietal junction

Interestingly, one-step thinkers showed almost no difference in brain activity when playing against humans versus computers, suggesting they weren't engaging in theory of mind. In contrast, two-step thinkers exhibited significant activity in the dorsomedial prefrontal cortex.

This research suggests that brain activity could potentially be used to predict someone's strategic abilities, such as their aptitude for poker or their social naivety. It also opens avenues for studying the development of strategic thinking in adolescent brains.

Bargaining and Brain Dynamics

In another experiment, participants bargained over a sum of money while being scanned using EEG. One player was informed about the total amount available, while the other was not. This setup mimics real-world negotiations where one party has more information than the other.

Interestingly, disagreements were more frequent when the amount to divide was smaller. EEG data revealed distinct patterns of brain activity during successful deals versus disagreements. In successful deals, activity in the uninformed brain tended to precede activity in the informed brain. However, in disagreements, the informed brain seemed to decide that a deal was unlikely, followed by activity in the uninformed brain.

These findings suggest that early warning signs in the brain could potentially be used to predict and prevent costly disagreements, such as litigation or messy divorces.

Chimpanzees: Unexpectedly Superior Competitors?

Humans share a close genetic kinship with chimpanzees, sharing 98.8% of our genes. Research suggests that chimpanzees may possess superior competitive abilities compared to humans.

In a matching game where chimpanzees had to coordinate or miscoordinate their choices on touch screens to win apple cube rewards, they adhered more closely to game-theoretic predictions than humans did. When the payoffs were manipulated, the chimpanzees' behavior shifted accordingly, aligning with the Nash equilibrium. Human behavior, on the other hand, was less sensitive to these payoff changes.

This surprising result suggests that chimpanzees may be better competitors than humans, at least as judged by game theory.

Key Takeaways

People engage in a limited amount of strategic thinking, utilizing theory of mind.
Early brain activity may predict the likelihood of disagreements.
Chimpanzees may be better competitors than humans in certain strategic scenarios.