Cooperation between individuals requires the ability to infer each other's mental states to form shared expectations over mutual gains and make cooperative choices that realize these gains. From evidence that the ability for mental state attribution involves the use of prefrontal cortex, we hypothesize that this area is involved in integrating theory-of-mind processing with cooperative actions. We report data from a functional MRI experiment designed to test this hypothesis. Subjects in a scanner played standard two-person ''trust and reciprocity'' games with both human and computer counterparts for cash rewards. Behavioral data shows that seven subjects consistently attempted cooperation with their human counterpart. Within this group prefrontal regions are more active when subjects are playing a human than when they are playing a computer following a fixed (and known) probabilistic strategy. Within the group of five noncooperators, there are no significant differences in prefrontal activation between computer and human conditions.

Employing a procedure suggested by a simple theoretical model of auctions in which bidders and sellers have observable and heterogenous reputations for default, we examine the effect of reputation on price in a data set drawn from the online auction site eBay. Our main empirical result is that seller, but not bidder, reputation has an economically and statistically significant effect on price.JEL codes: C51, D44, D82, L86 * We thank Sam Allen for research assistance with the data. Andrew Ching and Diego Moreno provided useful thoughts on early drafts of this paper. We are grateful to two anonymous referees and the coeditor for helpful comments.

Evolutionary theory reveals that punishment is effective in promoting cooperation and maintaining social norms. Although it is accepted that emotions are connected to punishment decisions, there remains substantial debate over why humans use costly punishment. Here we show experimentally that constraints on emotion expression can increase the use of costly punishment. We report data from ultimatum games, where a proposer offers a division of a sum of money and a responder decides whether to accept the split, or reject and leave both players with nothing. Compared with the treatment in which expressing emotions directly to proposers is prohibited, rejection of unfair offers is significantly less frequent when responders can convey their feelings to the proposer concurrently with their decisions. These data support the view that costly punishment might itself be used to express negative emotions and suggest that future studies will benefit by recognizing that human demand for emotion expression can have significant behavioral consequences in social environments, including families, courts, companies, and markets.cooperation ͉ ultimatum game ͉ sanction ͉ behavioral economics E motion is related to many aspects of social life, from physical survival to social relationships and reproduction (1, 2). With or without self-awareness, humans often display their feelings in different ways when aroused (3-5). However, in many naturally occurring social situations, individuals might believe that it is improper or impossible to reveal their feelings directly to, for example, a perceived antagonist. For instance, a sales clerk might find it improper to confront her customer (6). Because individuals often have a desire to express their emotions, the presence of constraints on expression can have important consequences for human behaviors (7,8). This research uses ultimatum games to investigate links between constraints on emotion expression (EE) and punishment decisions.The ultimatum game (9) is widely used to study costly punishment. In this game, one subject (the proposer) starts with, say, $20, and the other subject (the responder) begins with nothing. The proposer suggests a division of the $20 between them, and the responder decides whether to accept the proposed split. If accepted, then the money is split as proposed; if not, then both subjects earn nothing. Consequently, an income-maximizing responder should accept any positive offer, and an incomemaximizing proposer would offer the responder the smallest possible positive amount.In fact, decades of data from ultimatum games show that responders who are offered 20% or so of the total amount choose to reject about half the time (10), and rejection rates increase as responder shares become smaller. Reasons for rejections have been a source of much debate. Recently however, brain imaging data has been collected while responders make their decisions, and the findings suggest that emotions are tightly connected to rejections (11). (For more general research on the link betwee...

Unlike other species, humans cooperate in large, distantly related groups, a fact that has long presented a puzzle to biologists. The pathway by which adaptations for large-scale cooperation among nonkin evolved in humans remains a subject of vigorous debate. Results from theoretical analyses and agent-based simulations suggest that evolutionary dynamics need not yield homogeneous populations, but can instead generate a polymorphic population that consists of individuals who vary in their degree of cooperativeness. These results resonate with the recent increasing emphasis on the importance of individual differences in understanding and modeling behavior and dynamics in experimental games and decision problems. Here, we report the results of laboratory experiments that complement both theory and simulation results. We find that our subjects fall into three types, an individual's type is stable, and a group's cooperative outcomes can be remarkably well predicted if one knows its type composition. Reciprocal types, who contribute to the public good as a positive function of their beliefs about others' contributions, constitute the majority (63%) of players; cooperators and free-riders are also present in our subject population. Despite substantial behavioral differences, earnings among types are statistically identical. Our results support the view that our human subject population is in a stable, polymorphic equilibrium of types.behavioral economics ͉ cooperation ͉ evolution ͉ public goods