Arnold Kling  

Real News in Neuroeconomics

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While the press is back to wallowing in Watergate, the big news in economics was a small experiment.

In the game, investors were allotted 12 monetary credits, each worth 40 Swiss centimes (32 US cents), and asked to decide how much to give to the trustee. The participants knew that the investment would be quadrupled, and that the trustee could then decide how much, if any, to hand back.

Investors were more willing to part with their cash when they inhaled the potion, Fehr's team reports in Nature. Of 29 subjects given oxytocin, 13 handed over all of their cash. Only 6 of the 29 subjects given a placebo to sniff invested all 12 of their credits.

When the human trustee was replaced with a random number generator the effect disappeared. This shows, the researchers say, that oxytocin specifically boosts social interactions, rather than simply making people more willing to take risks.

For Discussion. What do you think will be the first practical application of this finding?

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The author at Financial Rounds in a related article titled Oxytocin and Trust (via Econolog) writes:
    Arnold Kling at Econolog points us to a very interesting experiment highlighted at ...Investors were more willing to part with their cash when they inhaled the potion. [Tracked on June 2, 2005 10:46 AM]
COMMENTS (9 to date)
Eli writes:

Financial advisors will light oxytocin-scented candles when clients visit their offices?

Scott McMullen writes:

Oxytoxin will be applied in casino environments. Oxytoxin at the blackjack table, roulette, and other dealer-hosted events.

pj writes:

College kids will wear oxytocin perfumes on their first dates.

Ernest Miller writes:

They've probably already started using it in Guantanamo Bay this morning. Either that, or a shipment is on the way.

Brad Hutchings writes:

Nano-scale dispensers will be added to our curency so that the rabid atheist crowd stops complaining about "In God we Trust".

I don't trust their method though. Shouldn't they have had a control group that just had sex or breastfed?

Robert Schwartz writes:

Oxytocin is a very powerful hormone that directly affects several systems. For example, it induces labor in pregnant women. It may make a difference in psychology experiments, but its more powerful effect on other body systems rules it out as a useful drug for general purposes.

Robert Schwartz writes:

Did they try a couple of glasses of wine as a control? I'll bet if they did they would find no difference.

Robert Schwartz writes:

I am also disinclined to accept these penny ante games as proof of a real phenomenon. I doubt the subjects ever take them seriously enough. I am willing to wager that the subjects would behave differently if they were betting their entire bankroll. Tends to focus the mind, you know.

aaron writes:

I don't know about practical applications (the hormone is probably only useful for research).

The headline should be "Sex Builds Trust".

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