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Understanding overbidding: using the neural circuitry of reward to design economic auctions.

ABSTRACT: We take advantage of our knowledge of the neural circuitry of reward to investigate a puzzling economic phenomenon: Why do people overbid in auctions? Using functional magnetic resonance imaging (fMRI), we observed that the social competition inherent in an auction results in a more pronounced blood oxygen level-dependent (BOLD) response to loss in the striatum, with greater overbidding correlated with the magnitude of this response. Leveraging these neuroimaging results, we design a behavioral experiment that demonstrates that framing an experimental auction to emphasize loss increases overbidding. These results highlight a role for the contemplation of loss in understanding the tendency to bid "too high." Current economic theories suggest overbidding may result from either "joy of winning" or risk aversion. By combining neuroeconomic and behavioral economic techniques, we find that another factor, namely loss contemplation in a social context, may mediate overbidding in auctions.

SUBMITTER: Delgado MR

PROVIDER: S-EPMC3061565 | biostudies-literature | 2008 Sep

REPOSITORIES: biostudies-literature

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Understanding overbidding: using the neural circuitry of reward to design economic auctions.

Delgado Mauricio R MR Schotter Andrew A Ozbay Erkut Y EY Phelps Elizabeth A EA

Science (New York, N.Y.) 20080901 5897

We take advantage of our knowledge of the neural circuitry of reward to investigate a puzzling economic phenomenon: Why do people overbid in auctions? Using functional magnetic resonance imaging (fMRI), we observed that the social competition inherent in an auction results in a more pronounced blood oxygen level-dependent (BOLD) response to loss in the striatum, with greater overbidding correlated with the magnitude of this response. Leveraging these neuroimaging results, we design a behavioral ...[more]

PMID: 18818362

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Project description:Recently, Willuhn et al. reported that cocaine use and even non-substance-related addictive behavior increases as dopaminergic function is reduced. Chronic cocaine exposure has been associated with decreases in D2/D3 receptors and was also associated with lower activation of cues in occipital cortex and cerebellum, in a recent PET study by Volkow's et al. Therefore, treatment strategies, like dopamine agonist therapy, that might conserve dopamine function may be an interesting approach to relapse prevention in psychoactive drug and behavioral addictions. To this aim, we evaluated the effect of KB220Z™ on reward circuitry of 10 heroin addicts undergoing protracted abstinence (average 16.9 months). In a randomized placebo-controlled crossover study of KB220Z, five subjects completed a triple-blinded experiment in which the subject, the person administering the treatment, and the person evaluating the response to treatment were blinded to the treatment that any particular subject was receiving. In addition, nine subjects were genotyped utilizing the GARSDX™ test. We preliminarily report that KB220Z induced an increase in BOLD activation in caudate-accumbens-dopaminergic pathways compared to placebo following 1-hour acute administration. Furthermore, KB220Z also reduced resting-state activity in the putamen of abstinent heroin addicts. In the second phase of this pilot study of all 10 abstinent heroin-dependent subjects, we observed that three brain regions of interest were significantly activated from resting state by KB220Z compared to placebo (p < 0.05). Increased functional connectivity was observed in a putative network that included the dorsal anterior cingulate, medial frontal gyrus, nucleus accumbens, posterior cingulate, occipital cortical areas, and cerebellum. These results and other quantitative electroencephalogy (qEEG) study results suggest a putative anti-craving/anti-relapse role of KB220Z in addiction by direct or indirect dopaminergic interaction. Due to small sample size, we caution definitive interpretation of these preliminary results, and confirmation with additional research and ongoing rodent and human studies of KB220Z is required.

Dataset Information

Understanding overbidding: using the neural circuitry of reward to design economic auctions.

Publications

Understanding overbidding: using the neural circuitry of reward to design economic auctions.

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