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Uncertainty in the form of risk or ambiguity can arise from the interaction with nature and other players, while strategic uncertainty arises only in interactions with others. Here, we systematically compare binary decisions between a safe option and a potentially higher paying but uncertain option in four experimental conditions with the same potential monetary outcomes: coordination vs. anti coordination games, as well as risky and ambiguous lotteries. In each condition, we progressively increase the value of the safe option and measure subjects' certainty equivalents (i.e., the specific safe payoff-threshold that makes a subject indifferent between the two options). We find that anti-coordination games and ambiguous lotteries elicit equally high aversion to uncertainty, relative to the other domains. In spite of this similarity, we find that subjects alternate between the safe and uncertain options much more frequently, thus displaying higher entropy, under anti-coordination relative to any of the other environments. These differences are predicted by theories of recursive reasoning in strategic games (e.g., thinking what others think we think etc.). Indeed, this can occur when interacting with intentional counterparts, but not with nature.

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In social interactions, strategic uncertainty arises when the outcome of one's choice depends on the choices of others. An important question is whether strategic uncertainty can be resolved by assessing subjective probabilities to the counterparts' behavior, as if playing against nature, and thus transforming the strategic interaction into a risky (individual) situation. By means of functional magnetic resonance imaging with human participants we tested the hypothesis that choices under strategic uncertainty are supported by the neural circuits mediating choices under individual risk and deliberation in social settings (i.e. strategic thinking). Participants were confronted with risky lotteries and two types of coordination games requiring different degrees of strategic thinking of the kind 'I think that you think that I think etc.' We found that the brain network mediating risk during lotteries (anterior insula, dorsomedial prefrontal cortex and parietal cortex) is also engaged in the processing of strategic uncertainty in games. In social settings, activity in this network is modulated by the level of strategic thinking that is reflected in the activity of the dorsomedial and dorsolateral prefrontal cortex. These results suggest that strategic uncertainty is resolved by the interplay between the neural circuits mediating risk and higher order beliefs (i.e. beliefs about others' beliefs).

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Modern societies offer a large variety of choices1,2, which is generally thought to be valuable3-7. But having too much choice can be detrimental1-3,8-11 if the costs of choice outweigh its benefits due to 'choice overload'12-14. Current explanatory models of choice overload mainly derive from behavioural studies13,14. A neuroscientific investigation could further inform these models by revealing the covert mental processes during decision-making. We explored choice overload using functional magnetic resonance imaging while subjects were either choosing from varying-sized choice sets or were browsing them. When choosing from sets of 6, 12 or 24 items, functional magnetic resonance imaging activity in the striatum and anterior cingulate cortex resembled an inverted U-shaped function of choice set size. Activity was highest for 12-item sets, which were perceived as having 'the right amount' of options and was lower for 6-item and 24-item sets, which were perceived as 'too small' and 'too large', respectively. Enhancing choice set value by adding a dominant option led to an overall increase of activity. When subjects were browsing, the decision costs were diminished and the inverted U-shaped activity patterns vanished. Activity in the striatum and anterior cingulate reflects choice set value and can serve as neural indicator of choice overload.

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In society, power is often transferred to another person or group. A previous work studied the evolution of cooperation among robot players through a coalition formation game with a non-cooperative procedure of acceptance of an agency of another player. Motivated by this previous work, we conduct a laboratory experiment on finitely repeated three-person coalition formation games. Human players with different strength according to the coalition payoffs can accept a transfer of power to another player, the agent, who then distributes the coalition payoffs. We find that the agencies method for coalition formation is quite successful in promoting efficiency. However, the agent faces a tension between short-term incentives of not equally distributing the coalition payoff and the long-term concern to keep cooperation going. In a given round, the strong player in our experiment often resolves this tension approximately in line with the Shapley value and the nucleolus. Yet aggregated over all rounds, the payoff differences between players are rather small, and the equal division of payoffs predicts about 80% of all groups best. One reason is that the voting procedure appears to induce a balance of power, independent of the individual player's strength: Selfish subjects tend to be voted out of their agency and are further disciplined by reciprocal behaviors.

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OBJECTIVES: To examine the decision making of Alzheimer's patients in a simple, classic game focusing on their capabilities to implement social norms and common social preferences. METHODS: Patients with Stage I (very mild and mild) Alzheimer's disease (AD) were asked to participate in a dictator game, a type of game in which a subject has to decide how to allocate a certain amount of money between himself and another person. RESULTS: When we compared the results of treatments involving AD patients (at an early stage) with those of identical treatments involving patients with mild cognitive impairment or healthy elderly controls, with similar ages and social backgrounds, we did not find statistically significant differences. DISCUSSION: This finding suggests that Stage I AD patients are as capable of making decisions involving basic social norms and preferences as other individuals of their age. Whatever brain structures are affected by the disease, they do not appear to influence, at this early stage, the neural basis for cooperation-enhancing social interactions.

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We used functional MRI (fMRI) to investigate human mental processes in a competitive interactive setting--the "beauty contest" game. This game is well-suited for investigating whether and how a player's mental processing incorporates the thinking process of others in strategic reasoning. We apply a cognitive hierarchy model to classify subject's choices in the experimental game according to the degree of strategic reasoning so that we can identify the neural substrates of different levels of strategizing. According to this model, high-level reasoners expect the others to behave strategically, whereas low-level reasoners choose based on the expectation that others will choose randomly. The data show that high-level reasoning and a measure of strategic IQ (related to winning in the game) correlate with the neural activity in the medial prefrontal cortex, demonstrating its crucial role in successful mentalizing. This supports a cognitive hierarchy model of human brain and behavior.

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