Michael Kosfeld is Assistant Professor for Behavioral Economics at the Institute for Empirical Research in Economics at the University of Zurich, Switzerland. He graduated in Mathematics from the University of Bonn in 1995 and received his PhD in Economics at Tilburg University in 1999.
His primary area of research is behavioral economics, game theory, and neuroeconomics with particular interest in the theoretical and experimental analysis of social interaction, boundedly rational decision-making and the psychology of incentives.
Games in the Brain
The understanding of neurobiological determinants of human behaviour attracts increasing scientific interest. The emerging field of "neuroeconomics" offers effective tools to analyse these determinants as well as their social and economic implications. This talk provides an introduction into the general approach of neuroeconomics and describes its main methods by means of recent neuroeconomic studies. In particular, I will talk about the neurobiology of trust. What enables humans to engage in trustful interactions? Why are humans able to extend trust to complete strangers?
An impressive body of research in psychology, law, and economics shows that there are important social and institutional conditions for the existence of trust. However, little is known about the biology of trust, i.e., the neurobiological mechanisms that are responsible for our ability to trust. Based on recent research I will argue that the hormone oxytocin plays a key role in human trust. Oxytocin is a neuropeptide that is released in humans during labour, breast-feeding, and sexual orgasm. It is known to play an important role in non-human mammals in pair bonding, maternal care, sexual behaviour, and the ability to form normal social attachments while reducing anxiety and the neuroendocrine response to social stressors.
In a recent study, we have shown that, having taken a nasal dose of oxytocin, subjects in an economic experiment exhibit a substantial increase in interpersonal trust relative to a control group who received a placebo. The experiment indicates that the effect of oxytocin on trust is not due to a general increase in the readiness to bear risks. On the contrary, oxytocin specifically increases the individual's willingness to accept social risks arising in interpersonal interactions. These results concur with animal research, suggesting an essential role of oxytocin as a biological basis of prosocial approach behaviour. They may also have positive clinical implications for patients with mental disorders that are associated with social dysfunctions such as, for example, social phobia.