When you're making a deal, what's going on in your brain?
-
0:01 - 0:03I'm going to talk about
the strategizing brain. -
0:03 - 0:06We're going to use an unusual
combination of tools -
0:06 - 0:07from game theory and neuroscience
-
0:07 - 0:11to understand how people interact socially
when value is on the line. -
0:11 - 0:14So game theory is a branch of,
originally, applied mathematics, -
0:14 - 0:17used mostly in economics and political
science, a little bit in biology, -
0:18 - 0:20that gives us a mathematical
taxonomy of social life, -
0:20 - 0:23and it predicts what people
are likely to do -
0:23 - 0:24and believe others will do
-
0:24 - 0:27in cases where everyone's actions
affect everyone else. -
0:27 - 0:31That's a lot of things: competition,
cooperation, bargaining, -
0:31 - 0:33games like hide-and-seek and poker.
-
0:34 - 0:36Here's a simple game to get us started.
-
0:36 - 0:38Everyone chooses a number
from zero to 100. -
0:38 - 0:41We're going to compute
the average of those numbers, -
0:41 - 0:45and whoever's closest to two-thirds
of the average wins a fixed prize. -
0:45 - 0:48So you want to be a little bit
below the average number -
0:48 - 0:49but not too far below,
-
0:49 - 0:53and everyone else wants to be a little bit
below the average number as well. -
0:53 - 0:54Think about what you might pick.
-
0:54 - 0:55As you're thinking,
-
0:55 - 0:58this is a toy model of something like
selling in the stock market -
0:58 - 1:00during a rising market:
-
1:00 - 1:03You don't want to sell too early,
because you miss out on profits, -
1:03 - 1:06but you don't want to wait too late,
to when everyone else sells, -
1:06 - 1:07triggering a crash.
-
1:07 - 1:11You want to be a little bit ahead
of the competition, but not too far ahead. -
1:11 - 1:14OK, here's two theories
about how people might think about this, -
1:14 - 1:15then we'll see some data.
-
1:15 - 1:17Some of these will sound familiar
-
1:17 - 1:19because you probably
are thinking that way. -
1:19 - 1:21I'm using my brain theory to see.
-
1:21 - 1:24A lot of people say, "I really don't know
what people are going to pick, -
1:24 - 1:28so I think the average will be 50" --
they're not being strategic at all -- -
1:28 - 1:30and "I'll pick two-thirds
of 50, that's 33." -
1:30 - 1:31That's a start.
-
1:31 - 1:33Other people, who are a little
more sophisticated, -
1:33 - 1:35using more working memory,
-
1:35 - 1:36say, "I think people will pick 33,
-
1:36 - 1:39because they're going
to pick a response to 50, -
1:39 - 1:41and so I'll pick 22,
which is two-thirds of 33." -
1:41 - 1:43They're doing one extra step
of thinking, two steps. -
1:44 - 1:45That's better.
-
1:45 - 1:48Of course, in principle,
you could do three, four or more, -
1:48 - 1:50but it starts to get very difficult.
-
1:50 - 1:52Just like in language and other domains,
-
1:52 - 1:55we know that it's hard for people
to parse very complex sentences -
1:55 - 1:56with a recursive structure.
-
1:56 - 1:58This is called the cognitive
hierarchy theory, -
1:58 - 2:01something I've worked on
and a few other people, -
2:01 - 2:02and it indicates a kind of hierarchy,
-
2:02 - 2:06along with some assumptions about
how many people stop at different steps -
2:06 - 2:08and how the steps of thinking are affected
-
2:08 - 2:10by lots of interesting variables
and variant people, -
2:10 - 2:12as we'll see in a minute.
-
2:12 - 2:15A very different theory, a much
more popular one and an older one, -
2:15 - 2:17due largely to John Nash
of "A Beautiful Mind" fame, -
2:17 - 2:19is what's called "equilibrium analysis."
-
2:19 - 2:22So if you've ever taken
a game theory course at any level, -
2:22 - 2:24you'll have learned a bit about this.
-
2:24 - 2:26An equilibrium is a mathematical state
-
2:26 - 2:29in which everybody has figured out
exactly what everyone else will do. -
2:29 - 2:31It is a very useful concept,
-
2:31 - 2:33but behaviorally,
it may not exactly explain -
2:33 - 2:36what people do the first time they play
these types of economic games -
2:36 - 2:38or in situations in the outside world.
-
2:38 - 2:41In this case, the equilibrium
makes a very bold prediction, -
2:41 - 2:43which is: everyone wants
to be below everyone else, -
2:43 - 2:45therefore, they'll play zero.
-
2:46 - 2:47Let's see what happens.
-
2:47 - 2:49This experiment's been done
many, many times. -
2:49 - 2:51Some of the earliest ones
were done in the '90s -
2:51 - 2:53by me and Rosemarie Nagel and others.
-
2:53 - 2:56This is a beautiful data set
of 9,000 people -
2:56 - 2:59who wrote in to three newspapers
and magazines that had a contest. -
2:59 - 3:01The contest said, send in your numbers,
-
3:01 - 3:04and whoever is close to two-thirds
of the average will win a big prize. -
3:04 - 3:08As you can see, there's so much data
here, you can see the spikes very visibly. -
3:08 - 3:11There's a spike at 33 --
those are people doing one step. -
3:11 - 3:13There is another spike visible at 22.
-
3:13 - 3:16Notice, by the way, most people
pick numbers right around there; -
3:16 - 3:18they don't necessarily
pick exactly 33 and 22. -
3:18 - 3:20There's something a bit noisy around it.
-
3:20 - 3:22But you can see those spikes on that end.
-
3:22 - 3:24There's another group of people
-
3:24 - 3:26who seem to have a firm grip
on equilibrium analysis, -
3:26 - 3:28because they're picking zero or one.
-
3:28 - 3:30But they lose, right?
-
3:30 - 3:33Because picking a number that low
is actually a bad choice -
3:33 - 3:36if other people aren't doing
equilibrium analysis as well. -
3:36 - 3:37So they're smart, but poor.
-
3:38 - 3:40(Laughter)
-
3:40 - 3:42Where are these things
happening in the brain? -
3:42 - 3:46One study by Coricelli and Nagel
gives a really sharp, interesting answer. -
3:46 - 3:50They had people play this game
while they were being scanned in an fMRI, -
3:50 - 3:51and two conditions:
-
3:51 - 3:52in some trials, they're told,
-
3:52 - 3:55"You're playing another person
who's playing right now. -
3:55 - 3:58We'll match up your behavior
at the end and pay you if you win." -
3:58 - 4:01In other trials, they're told,
"You're playing a computer, -
4:01 - 4:02they're just choosing randomly."
-
4:02 - 4:04So what you see here
is a subtraction of areas -
4:04 - 4:07in which there's more brain activity
when you're playing people -
4:07 - 4:09compared to playing the computer.
-
4:09 - 4:11And you see activity
in some regions we've seen today, -
4:12 - 4:14medial prefrontal cortex,
dorsomedial, up here, -
4:14 - 4:16ventromedial prefrontal cortex,
anterior cingulate, -
4:16 - 4:19an area that's involved
in lots of types of conflict resolution, -
4:19 - 4:21like if you're playing "Simon Says,"
-
4:21 - 4:24and also the right and left
temporoparietal junction. -
4:24 - 4:27And these are all areas
which are fairly reliably known to be -
4:27 - 4:29part of what's called
a "theory of mind" circuit -
4:29 - 4:31or "mentalizing circuit."
-
4:31 - 4:34That is, it's a circuit that's used
to imagine what other people might do. -
4:34 - 4:38These were some of the first studies
to see this tied in to game theory. -
4:39 - 4:41What happens with these
one- and two-step types? -
4:41 - 4:43So, we classify people
by what they picked, -
4:43 - 4:47and then we look at the difference
between playing humans versus computers, -
4:47 - 4:49which brain areas
are differentially active. -
4:49 - 4:51On the top, you see the one-step players.
-
4:51 - 4:52There's almost no difference.
-
4:52 - 4:55The reason is, they're treating
other people like a computer, -
4:55 - 4:56and the brain is too.
-
4:56 - 4:59The bottom players, you see
all the activity in dorsomedial PFC. -
4:59 - 5:02So we know the two-step players
are doing something differently. -
5:03 - 5:05Now, what can we do with this information?
-
5:05 - 5:07You might be able to look
at brain activity and say, -
5:07 - 5:11"This person will be a good poker player,"
or "This person's socially naive." -
5:11 - 5:14We might also be able to study things
like development of adolescent brains -
5:14 - 5:17once we have an idea
of where this circuitry exists. -
5:17 - 5:18OK. Get ready.
-
5:18 - 5:20I'm saving you some brain activity,
-
5:20 - 5:23because you don't need to use
your hair detector cells. -
5:23 - 5:26You should use those cells
to think carefully about this game. -
5:26 - 5:28This is a bargaining game.
-
5:28 - 5:31Two players who are being
scanned using EEG electrodes -
5:31 - 5:33are going to bargain
over one to six dollars. -
5:33 - 5:36If they can do it in 10 seconds,
they'll earn that money. -
5:36 - 5:39If 10 seconds go by and they haven't
made a deal, they get nothing. -
5:39 - 5:41That's kind of a mistake together.
-
5:41 - 5:44The twist is that one player, on the left,
-
5:44 - 5:46is informed about how much
on each trial there is. -
5:46 - 5:49They play lots of trials
with different amounts each time. -
5:49 - 5:51In this case, they know
there's four dollars. -
5:51 - 5:54The uninformed player doesn't know,
but they know the informed player knows. -
5:54 - 5:57So the uninformed player's
challenge is to say, -
5:57 - 5:58"Is this guy being fair,
-
5:58 - 6:00or are they giving me a very low offer
-
6:00 - 6:04in order to get me to think there's only
one or two dollars available to split?" -
6:04 - 6:06in which case they might reject it
and not come to a deal. -
6:06 - 6:09So there's some tension here
between trying to get the most money -
6:09 - 6:12but trying to goad the other player
into giving you more. -
6:12 - 6:15And the way they bargain
is to point on a number line -
6:15 - 6:16that goes from zero to six dollars.
-
6:16 - 6:19They're bargaining over how much
the uninformed player gets, -
6:19 - 6:21and the informed player will get the rest.
-
6:21 - 6:23So this is like
a management-labor negotiation -
6:23 - 6:25in which the workers don't know
-
6:25 - 6:28how much profits
the privately held company has, -
6:28 - 6:31and they want to maybe
hold out for more money, -
6:31 - 6:33but the company might want
to create the impression -
6:33 - 6:36that there's very little to split:
"I'm giving the most I can." -
6:36 - 6:40First, some behavior: a bunch
of the subject pairs play face-to-face. -
6:40 - 6:42We have other data
where they play across computers. -
6:42 - 6:45That's an interesting difference,
as you might imagine. -
6:45 - 6:46But a bunch of the face-to-face pairs
-
6:47 - 6:49agree to divide the money
evenly every single time. -
6:49 - 6:52Boring. It's just not
interesting neurally. -
6:52 - 6:55It's good for them --
they make a lot of money. -
6:55 - 6:56But we're interested in:
-
6:56 - 7:00Can we say something about when
disagreements occur versus don't occur? -
7:00 - 7:03So this is the other group
of subjects, who often disagree. -
7:03 - 7:06They bicker and disagree
and end up with less money. -
7:06 - 7:09They might be eligible to be
on "Real Housewives," the TV show. -
7:09 - 7:10(Laughter)
-
7:10 - 7:12You see on the left,
-
7:12 - 7:15when the amount to divide
is one, two or three dollars, -
7:15 - 7:16they disagree about half the time;
-
7:16 - 7:19when it's four, five, six,
they agree quite often. -
7:19 - 7:21This turns out to be
something that's predicted -
7:21 - 7:23by a very complicated type of game theory
-
7:23 - 7:26you should come to graduate school
at CalTech and learn about. -
7:26 - 7:28It's a little too complicated
to explain right now, -
7:28 - 7:31but the theory tells you
that this shape should occur. -
7:31 - 7:33Your intuition might tell you that, too.
-
7:33 - 7:36Now I'm going to show you
the results from the EEG recording. -
7:36 - 7:37Very complicated.
-
7:37 - 7:40The right brain schematic
is the uninformed person, -
7:40 - 7:41and the left is the informed.
-
7:41 - 7:44Remember that we scanned
both brains at the same time, -
7:44 - 7:46so we can ask about time-synced activity
-
7:46 - 7:49in similar or different
areas simultaneously, -
7:49 - 7:51just like if you wanted
to study a conversation, -
7:51 - 7:54and you were scanning two people
talking to each other. -
7:54 - 7:56You'd expect common
activity in language regions -
7:56 - 7:58when they're listening and communicating.
-
7:58 - 8:02So the arrows connect regions
that are active at the same time. -
8:02 - 8:04The direction of the arrows
-
8:04 - 8:06flows from the region
that's active first in time, -
8:06 - 8:10and the arrowhead goes
to the region that's active later. -
8:10 - 8:12So in this case, if you look carefully,
-
8:12 - 8:14most of the arrows
flow from right to left. -
8:14 - 8:18That is, it looks
as if the uninformed brain activity -
8:18 - 8:19is happening first,
-
8:19 - 8:23and then it's followed
by activity in the informed brain. -
8:23 - 8:27And by the way, these are trials
where their deals were made. -
8:27 - 8:28This is from the first two seconds.
-
8:28 - 8:31We haven't finished analyzing this data,
so we're still peeking in, -
8:32 - 8:35but the hope is that we can say something
in the first couple of seconds -
8:35 - 8:37about whether they'll make a deal or not,
-
8:37 - 8:40which could be very useful in thinking
about avoiding litigation -
8:40 - 8:42and ugly divorces and things like that.
-
8:42 - 8:46Those are all cases in which a lot
of value is lost by delay and strikes. -
8:47 - 8:49Here's the case where
the disagreements occur. -
8:49 - 8:51You can see it looks different
than the one before. -
8:51 - 8:53There's a lot more arrows.
-
8:53 - 8:55That means that the brains
are synced up more closely -
8:55 - 8:57in terms of simultaneous activity,
-
8:57 - 8:59and the arrows flow clearly
from left to right. -
8:59 - 9:01That is, the informed brain
seems to be deciding, -
9:01 - 9:04"We're probably not going
to make a deal here." -
9:04 - 9:06And then later, there's activity
in the uninformed brain. -
9:07 - 9:09Next, I'm going to introduce you
to some relatives. -
9:09 - 9:11They're hairy, smelly, fast and strong.
-
9:11 - 9:14You might be thinking back
to your last Thanksgiving. -
9:14 - 9:15(Laughter)
-
9:15 - 9:17Maybe, if you had a chimpanzee with you.
-
9:17 - 9:21Charles Darwin and I and you broke
off from the family tree from chimpanzees -
9:22 - 9:23about five million years ago.
-
9:23 - 9:25They're still our closest genetic kin.
-
9:25 - 9:26We share 98.8 percent of the genes.
-
9:27 - 9:29We share more genes with them
than zebras do with horses. -
9:29 - 9:31And we're also their closest cousin.
-
9:31 - 9:34They have more genetic relation
to us than to gorillas. -
9:34 - 9:37So, how humans and chimpanzees
behave differently -
9:37 - 9:39might tell us a lot about brain evolution.
-
9:39 - 9:42This is an amazing memory test
-
9:42 - 9:44from [Kyoto], Japan,
the Primate Research Institute, -
9:44 - 9:46where they've done a lot of this research.
-
9:46 - 9:49This goes back a ways.
They're interested in working memory. -
9:49 - 9:51The chimp will see, watch carefully,
-
9:51 - 9:55they'll see 200 milliseconds' exposure --
that's fast, eight movie frames -- -
9:55 - 9:57of numbers one, two, three, four, five.
-
9:57 - 9:59Then they disappear
and are replaced by squares, -
9:59 - 10:01and they have to press the squares
-
10:01 - 10:03that correspond to the numbers
from low to high -
10:03 - 10:04to get an apple reward.
-
10:04 - 10:06Let's see how they can do it.
-
10:16 - 10:18This is a young chimp.
-
10:18 - 10:21The young ones are better
than the old ones, just like humans. -
10:21 - 10:22(Laughter)
-
10:22 - 10:23And they're highly experienced,
-
10:23 - 10:25they've done this thousands of times.
-
10:25 - 10:28Obviously there's a big training
effect, as you can imagine. -
10:28 - 10:29(Laughter)
-
10:29 - 10:32You can see they're very
blasé and effortless. -
10:32 - 10:35Not only can they do it very well,
they do it in a sort of lazy way. -
10:35 - 10:36(Laughter)
-
10:36 - 10:38Who thinks you could beat the chimps?
-
10:38 - 10:39(Laughter)
-
10:39 - 10:40Wrong. (Laughter)
-
10:40 - 10:43We can try. We'll try. Maybe we'll try.
-
10:43 - 10:47OK, so the next part of the study
I'm going to go quickly through -
10:47 - 10:50is based on an idea of Tetsuro Matsuzawa.
-
10:50 - 10:53He had a bold idea he called
the "cognitive trade-off hypothesis." -
10:53 - 10:57We know chimps are faster and stronger;
they're also obsessed with status. -
10:57 - 10:59His thought was, maybe
they've preserved brain activities -
10:59 - 11:01and practice them in development
-
11:01 - 11:05that are really, really important to them
to negotiate status and to win, -
11:05 - 11:08which is something like strategic
thinking during competition. -
11:08 - 11:09So we're going to check that out
-
11:09 - 11:12by having the chimps actually play a game
-
11:12 - 11:14by touching two touch screens.
-
11:14 - 11:18The chimps are interacting
with each other through the computers. -
11:18 - 11:19They'll press left or right.
-
11:19 - 11:22One chimp is called a matcher;
they win if they press left-left, -
11:22 - 11:26like a seeker finding someone
in hide-and-seek, or right-right. -
11:26 - 11:27The mismatcher wants to mismatch;
-
11:27 - 11:30they want to press
the opposite screen of the chimp. -
11:30 - 11:32And the rewards are apple cube rewards.
-
11:32 - 11:35So here's how game theorists
look at these data. -
11:35 - 11:37This is a graph of the percentage of times
-
11:37 - 11:39the matcher picked right on the x-axis
-
11:39 - 11:41and the percentage of times
they picked right -
11:41 - 11:43by the mismatcher on the y-axis.
-
11:44 - 11:47So a point here is the behavior
by a pair of players, -
11:47 - 11:49one trying to match,
one trying to mismatch. -
11:49 - 11:52The NE square in the middle --
actually, NE, CH and QRE -- -
11:52 - 11:56those are three different theories
of Nash equilibrium and others, -
11:56 - 11:57tells you what the theory predicts,
-
11:57 - 11:59which is that they should match 50-50,
-
11:59 - 12:02because if you play left
too much, for example, -
12:02 - 12:05I can exploit that if I'm the mismatcher
by then playing right. -
12:05 - 12:08And as you can see, the chimps --
each chimp is one triangle -- -
12:08 - 12:11are circled around,
hovering around that prediction. -
12:11 - 12:13Now we move the payoffs.
-
12:13 - 12:16We're going to make the left-left payoff
for the matcher a little higher. -
12:16 - 12:18Now they get three apple cubes.
-
12:18 - 12:21Game theoretically, that should
make the mismatcher's behavior shift: -
12:21 - 12:25the mismatcher will think, "Oh, this guy's
going to go for the big reward, -
12:25 - 12:27so I'll go to the right,
make sure he doesn't get it." -
12:27 - 12:29And as you can see,
their behavior moves up -
12:29 - 12:32in the direction of this change
in the Nash equilibrium. -
12:32 - 12:34Finally, we changed
the payoffs one more time. -
12:34 - 12:36Now it's four apple cubes,
-
12:36 - 12:38and their behavior again moves
towards the Nash equilibrium. -
12:39 - 12:41It's sprinkled around,
but if you average the chimps out, -
12:41 - 12:43they're really close, within .01.
-
12:43 - 12:45They're actually closer
than any species we've observed. -
12:45 - 12:49What about humans? You think
you're smarter than a chimpanzee? -
12:49 - 12:53Here's two human groups in green and blue.
-
12:53 - 12:56They're closer to 50-50; they're not
responding to payoffs as closely. -
12:56 - 12:58And also if you study
their learning in the game, -
12:58 - 13:00they aren't as sensitive
to previous rewards. -
13:00 - 13:04The chimps play better than the humans,
in terms of adhering to game theory. -
13:04 - 13:07And these are two different groups
of humans, from Japan and Africa; -
13:07 - 13:09they replicate quite nicely.
-
13:09 - 13:11None of them are close
to where the chimps are. -
13:12 - 13:13So, some things we learned:
-
13:13 - 13:17people seem to do a limited amount of
strategic thinking using theory of mind. -
13:17 - 13:19We have preliminary
evidence from bargaining -
13:19 - 13:22that early warning signs in the brain
might be used to predict -
13:22 - 13:24whether there'll be a bad
disagreement that costs money, -
13:24 - 13:27and chimps are "better"
competitors than humans, -
13:27 - 13:28as judged by game theory.
-
13:28 - 13:29Thank you.
-
13:29 - 13:32(Applause)
- Title:
- When you're making a deal, what's going on in your brain?
- Speaker:
- Colin Camerer
- Description:
-
When two people are trying to make a deal -- whether they’re competing or cooperating -- what’s really going on inside their brains? Behavioral economist Colin Camerer shows research that reveals just how little we’re able to predict what others are thinking. And he presents an unexpected study that shows chimpanzees might just be better at it than we are. (Filmed at TEDxCalTech.)
- Video Language:
- English
- Team:
- closed TED
- Project:
- TEDTalks
- Duration:
- 13:49
Camille Martínez commented on English subtitles for When you're making a deal, what's going on in your brain? | ||
Camille Martínez edited English subtitles for When you're making a deal, what's going on in your brain? | ||
Camille Martínez edited English subtitles for When you're making a deal, what's going on in your brain? | ||
Camille Martínez edited English subtitles for When you're making a deal, what's going on in your brain? | ||
Joanna Pietrulewicz edited English subtitles for When you're making a deal, what's going on in your brain? | ||
Joanna Pietrulewicz edited English subtitles for When you're making a deal, what's going on in your brain? | ||
Joanna Pietrulewicz edited English subtitles for When you're making a deal, what's going on in your brain? | ||
Brian Greene edited English subtitles for When you're making a deal, what's going on in your brain? |
Camille Martínez
Hello,
The English transcript was updated on 5/3/20. In addition to other edits, please note the following change:
09:42 from Nagoya, Japan, Primate Research Institute ---> from [Kyoto], Japan, the Primate Research Institute
Thank you!