Self-Referential Thinking and Equilibrium as States of Mind in Games: Fmri Evidence

51 Pages Posted: 25 Apr 2005 Last revised: 4 Mar 2008

See all articles by Meghana Bhatt

Meghana Bhatt

California Institute of Technology - Division of the Humanities and Social Sciences; Human Neuroimaging Lab, BCM; Beckman Research Institute, City of Hope

Colin Camerer

California Institute of Technology - Division of the Humanities and Social Sciences

Abstract

Sixteen subjects' brain activity were scanned using FMRI as they made choices, expressed beliefs, and expressed iterated 2nd-order beliefs (what they think others believe they will do) in eight games. Cingulate cortex and prefrontal areas (active in theory of mind and social reasoning) are differentially activated in making choices versus expressing beliefs. Forming self-referential 2nd-order beliefs about what others think you will do seems to be a mixture of processes used to make choices and form beliefs. In equilibrium, there is little difference in neural activity across choice and belief tasks; there is a purely neural definition of equilibrium as a "state of mind". "Strategic IQ", actual earnings from choices and accurate beliefs, is negatively correlated with activity in the insula, suggesting poor strategic thinkers are too self-focused, and is positively correlated with ventral striatal activity (suggesting that high IQ subjects are spending more mental energy predicting rewards).

Keywords: Neuroeconomics, fMRI, game theory, strategic, second order beliefs

JEL Classification: C70, C91

Suggested Citation

Bhatt, Meghana and Bhatt, Meghana and Camerer, Colin F., Self-Referential Thinking and Equilibrium as States of Mind in Games: Fmri Evidence. Games and Economic Behavior, Vol. 52, pp. 424-459, August 2005, Available at SSRN: https://ssrn.com/abstract=705761

Meghana Bhatt (Contact Author)

California Institute of Technology - Division of the Humanities and Social Sciences ( email )

1200 East California Blvd.
Pasadena, CA 91125
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Human Neuroimaging Lab, BCM ( email )

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Beckman Research Institute, City of Hope ( email )

1500 E. Duarte Rd.
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Colin F. Camerer

California Institute of Technology - Division of the Humanities and Social Sciences ( email )

1200 East California Blvd.
Pasadena, CA 91125
United States
626-395-4054 (Phone)
626-432-1726 (Fax)

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