Do we care about the powerless third? An ERP study of the three-person ultimatum game

Johanna Alexopoulos, Daniela M. Pfabigan, Claus Lamm, Herbert Bauer, Florian Ph. S. Fischmeister

Recent years have provided increasing insights into the factors affecting economic decision-making. Little is known about how these factors influence decisions that also bear consequences for other people. We examined whether decisions that also affected a third, passive player modulate the behavioral and neural responses to monetary offers in a modified version of the three-person ultimatum game. We aimed to elucidate to what extent social preferences affect early neuronal processing when subjects were evaluating offers that were fair or unfair to themselves, to the third player, or to both. As an event-related potential (ERP) index for early evaluation processes in economic decision-making, we recorded the medial frontal negativity (MFN) component in response to such offers. Unfair offers were rejected more often than equitable ones, in particular when negatively affecting the subject. While the MFN amplitude was higher following unfair as compared to fair offers to the subject, MFN amplitude was not modulated by the shares assigned to the third, passive player. Furthermore, rejection rates and MFN amplitudes following fair offers were positively correlated, as subjects showing lower MFN amplitudes following fair offers tended to reject unfair offers more often-but only if those offers negatively affected their own payoff. Altogether, the rejection behavior suggests that humans mainly care about a powerless third when they are confronted with inequality as well. The correlation between rejection rates and the MFN amplitude supports the notion that this ERP component is also modulated by positive events and highlights how our expectations concerning other humans' behavior guide our own decisions. However, social preferences like inequality aversion and concern for the well-being of others are not reflected in this early neuronal response, but seem to result from later, deliberate and higher-order cognitive processes.