NDLI: Mental processes and strategic equilibration: An fMRI study of selling strategies in second price auctions

Content Provider	Springer Nature Link
Author	Grether, David M. Plott, Charles R. Rowe, Daniel B. Sere, Martin Allman, John M.
Copyright Year	2007
Abstract	This study is the first to attempt to isolate a relationship between cognitive activity and equilibration to a Nash Equilibrium. Subjects, while undergoing fMRI scans of brain activity, participated in second price auctions against a single competitor following predetermined strategy that was unknown to the subject. For this auction there is a unique strategy that will maximize the subjects’ earnings, which is also a Nash equilibrium of the associated game theoretic model of the auction. As is the case with all games, the bidding strategies of subjects participating in second price auctions most often do not reflect the equilibrium bidding strategy at first but with experience, typically exhibit a process of equilibration, or convergence toward the equilibrium. This research is focused on the process of convergence.In the data reported here subjects participated in sixteen auctions, after which all subjects were told the strategy that will maximize their revenues, the theoretical equilibrium. Following that announcement, sixteen more auctions were performed. The question posed by the research concerns the mental activity that might accompany equilibration as it is observed in the bidding behavior. Does brain activation differ between being equilibrated and non-equilibrated in the sense of a bidding strategy? If so, are their differences in the location of activation during and after equilibration? We found significant activation in the frontal pole especially in Brodmann’s area 10, the anterior cingulate cortex, the amygdala and the basal forebrain. There was significantly more activation in the basal forebrain and the anterior cingulate cortex during the first sixteen auctions than in the second sixteen. The activity in the amygdala shifted from the right side to the left after the solution was given.
Starting Page	105
Ending Page	122
Page Count	18
File Format	PDF
ISSN	13864157
Journal	Experimental Economics
Volume Number	10
Issue Number	2
e-ISSN	15736938
Language	English
Publisher	Kluwer Academic Publishers-Plenum Publishers
Publisher Date	2007-02-13
Publisher Place	New York
Access Restriction	One Nation One Subscription (ONOS)
Subject Keyword	Experiments Auctions Operations Research/Decision Theory Public Finance & Economics Microeconomics Methodology and the History of Economic Thought Economic Theory
Content Type	Text
Resource Type	Article
Subject	Economics, Econometrics and Finance

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1	Ministry of Education (GoI), Department of Higher Education	Sanctioning Authority	https://www.education.gov.in/ict-initiatives
2	Indian Institute of Technology Kharagpur	Host Institute of the Project: The host institute of the project is responsible for providing infrastructure support and hosting the project	https://www.iitkgp.ac.in
3	National Digital Library of India Office, Indian Institute of Technology Kharagpur	The administrative and infrastructural headquarters of the project	Dr. B. Sutradhar bsutra@ndl.gov.in
4	Project PI / Joint PI	Principal Investigator and Joint Principal Investigators of the project	Dr. B. Sutradhar bsutra@ndl.gov.in Prof. Saswat Chakrabarti will be added soon
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