Watson Lecture: Puzzling Prices

PASADENA, Calif.- Ever wonder why gas prices can vary by 15¢ --or more-- over a two-mile drive, or why an airline will change the cost of fares 500,000 times per day? Curious about what determines prices in the first place?

R. Preston McAfee of the California Institute of Technology has examined these mysteries, and provides an explanation: a concept called "price discrimination," which essentially means charging each customer what the market can bear.

On Wednesday, May 3, McAfee, J. Stanley Johnson Professor of Business Economics and Management and executive officer for the social sciences, will delve into the oddities of business pricing using examples from IBM, airlines, and more, in his talk, "Why Are Prices So Bizarre?" It is the third program of the winter/spring 2006 Earnest C. Watson Lecture Series.

The talk will take place at 8 p.m. in Beckman Auditorium, 332 S. Michigan Avenue south of Del Mar Boulevard, on the Caltech campus in Pasadena. Seating is available on a free, no-ticket-required, first-come, first-served basis. Caltech has offered the Watson Lecture Series since 1922, when it was conceived by the late Caltech physicist Earnest Watson as a way to explain science to the local community.

For more information, call 1(888) 2CALTECH (1-888-222-5832) or (626) 395-4652.

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Contact: Kathy Svitil (626) 395-8022 ksvitil@caltech.edu

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Caltech Philosopher Wins Lakatos Award

PASADENA, Calif.—Those who think that philosophy is about a bunch of dead guys with names like Plato and Kant and Hume will be surprised to learn that the philosophy of science is active and vibrant these days. What's more, some of the work currently being done in the field is as relevant to our daily concerns as the question of whether a certain new cancer drug is being tested properly in clinical trials.

According to James Woodward, the Koepfli Professor of the Humanities at the California Institute of Technology, some of the most interesting work in contemporary philosophy concerns the underlying logic of causal inference. By definition, the philosophy of science is the study of scientific methodology, but new developments such as biological innovation have kept guys like Woodward busy of late.

For a recent book on the topic of causal explanation, Making Things Happen, Woodward has been named winner of this year's Lakatos Award by the London School of Economics and Political Science. The Lakatos Award is given annually for an outstanding contribution to the philosophy of science. Woodward will travel to London in May to receive the £10,000 award and deliver a lecture.

Woodward advocates what he calls an interventionist conception of causation, according to which our interest in finding causal explanations is closely related to our interest in changing or manipulating nature.

For example, research in biology and biomedicine has become more inclined toward deliberate intervention to promote better causal understanding of the rules of nature. Whereas biologists once devoted much of their resources toward observation and classification, they may now manipulate genes in order to understand an organism, its development, and its molecular composition.

Central to constructing causal explanations is providing answers to what Woodward calls "what-if-things-had-been-different questions." Explanations of this type result in "counterfactual" dependencies, and these must be understood appropriately, he writes.

As an end result, "causal and explanatory claims are informed by our interest as practical agents in changing the world," Woodward adds.

Causal explanation is not only important in scientific life, but in our everyday interactions as well. We have a vested interest in knowing whether a bogus e-mail file will cause our computer to crash, but we also want to know whether a specific drug can treat heart disease.

The reason the latter is of concern to the philosophy of science, Woodward says, is that it's necessary to know precisely what is involved in clinical trials. "You want to determine whether this new medicine improves the prospects of people with heart disease, but if you set up an experiment and the test subjects are, on balance, healthy, then you're going to be led to a mistake in your inference about whether the medicine is effective or not."

While this conundrum has been known for decades as the "problem of confounding," Woodward says that it exemplifies the kind of situation that philosophers a few hundred years ago didn't understand. This is because the preferred procedure, in the previous example, is to employ probability and statistics in randomly assigning people to the control group and the group that gets the medicine.

"You then hope that all of the other things that could cause discrepancies are approximately equal," he says.

Another especially active endeavor in Woodward's field is the creation of automated data-mining techniques. This work involves looking at statistical data in ways to properly infer causal relationships.

The Lakatos Award is made possible by a generous endowment from the Latsis Foundation, and is given in memory of the former London School of Economics and Political Science professor Imre Lakatos.

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Revealing Book from Caltech Professor Chronicles Jewish Past

PASADENA, Calif.-"[Cousin] Bobby's arrests . . . angered rather than surprised my relatives. In half a century of racketeering, he was the first member of the family to be arrested, let alone convicted. The first, that is, if you excluded Tilly's husband, sweet-talking Uncle Charlie, who did two years for setting fire to his failing upholstery business in order to collect the insurance . . ."

The preceding excerpt is from award-winning author and historian Robert A. Rosenstone's book The Man Who Swam into History: The (Mostly) True Story of My Jewish Family (University of Texas Press, Austin, 2005).

On February 13 at 7 p.m., at Vroman's Bookstore, Rosenstone, a professor of history at the California Institute of Technology, will do a reading from his book, which chronicles a Jewish family's passage from Romania to America.

Although the book describes the Jewish Diaspora in the 20th century, it is much more than the typical "poor immigrant, coming to America, rags to riches" saga. From Communists to racketeers and con men, mistresses to mysterious murders, The Man Who Swam into History weaves an intriguing--sometimes humorous--tale of one Jewish family's migration to America, spun from a fascinating collection of memoirs, and as the subtitle says, "mostly true" stories.

Rosenstone's unique literary style ingeniously blends biographical fact and fiction, revealing the true characters of his loving--sometimes eccentric--family and their gossip, quarrels, shared dreams, and fears. Rather than a linear chronology, Rosenstone combines the memoirs, anecdotes, and embellished tales resurrected from the lives of three familial generations. And he takes the "fictional liberty" to sometimes reconstruct the past, when the facts are vague or sketchy. The book sometimes even questions the truth of its own assertions.

For example, Rosenstone says, "Since I was a small child, I always heard the heroic tales of my brave and noble grandfather, Chaim Baer, who escaped from Russia by swimming the Pruth River to Romania . . . It wasn't until I was an adult that I learned that almost every Romanian Jew has a brave and heroic grandfather who swam the Pruth River to escape Russia . . . "

Rosenstone goes on to say, "I grew up believing that my father was a successful businessman. I did not find out until I was 19 or 20 years old, (from older cousins--and my mother confirmed it) that my father's real occupation was numbers running and racketeering." Rosenstone continues, "Families are a 'field of stories.' They share stories, recollections, and family folklore--not just the factual truth. These shared memories are what bind and hold a family together."

Alan Cheuse, a writer and a commentator for National Public Radio, says of Rosenstone and his latest book, "One of our most imaginative living historians takes us into the midst of his own past and makes us part of his family, even as he becomes part of our own. This book stands as a triumph of new scholarship and narrative."

Rosenstone's works have been translated into French, German, Spanish, Italian, Portuguese, Japanese, Korean, and Hungarian. He has won four fellowships from the National Endowment for the Humanities and three Fulbright fellowships. His previous works include Romantic Revolutionary: A Biography of John Reed, which was used as the basis of the film Reds, a winner of several Oscars; Crusade of the Left; Mirror in the Shrine; Visions of the Past: The Challenge of Film to Our Idea of History; and King of Odessa, a historical novel based on the life of Russian writer Isaac Babel.

Vroman's Bookstore is located at 695 East Colorado Boulevard in Pasadena. For more information, call (626) 449-5320. ###

Media Contact: Deborah Williams-Hedges (626) 395-3227 debwms@caltech.edu

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Experimental Economists Find Brain Regions That Govern Fear of the Economic Unknown

PASADENA, Calif.—Do you have second thoughts when ordering a strange-sounding dish at an exotic restaurant? Afraid you'll get fricasseed eye of newt, or something even worse? If you do, it's because certain neurons in the brain are saying that the potential reward for the risk is unknown. These regions of the brain have now been pinpointed by experimental economists at the California Institute of Technology and the University of Iowa College of Medicine.

In the December 9 issue of the journal Science, Caltech's Axline Professor of Business Economics Colin Camerer and his colleagues report on a series of experiments involving Caltech student volunteers and patients with specific types of brain damage at the University of Iowa. The object of the experiments was to see how the brain responded to degrees of economic uncertainty by having the test subjects make wagers while being scanned by a functional magnetic resonance imager (fMRI).

The results show that there is a definite difference in the brain when the wagers add a degree of ambiguity to the risk. In cases where the game involves a simple wager in which the chance of getting a payoff is very clearly known, the dorsal striatum tends to light up. But in a nearly identical game in which the chances of winning are unknown, the more emotional parts of the brain known as the amygdala and orbitofrontal cortex (OFC) are involved.

According to Camerer, this is a clear advancement in understanding the neural basis of economic decision making. Much is already known about how people deal with risk from the standpoint of social sciences and behavioral ecology, but greater understanding of how the brain structures are involved provides new insights on how certain behaviors are connected.

"The amygdala has been hypothesized as a generalized vigilance module in the brain," he explains. "We know, for example, that anyone with damage to the amygdala cannot pick up certain facial cues that normally allow humans to know whether they should trust someone else."

Problems with the amygdala are also known to be associated with autism, a brain disorder that causes sufferers to have trouble recognizing emotions in other people's faces. One of the authors of the paper, Ralph Adolphs, the Bren Professor of Psychology and Neuroscience at Caltech, has done extensive work in this area.

As for the OFC, the structure is associated with the integration of emotional and cognitive input. Therefore the OFC and amygdala presumably work together when a person is confronted with a wager for which the odds are unknown-the amygdala sends a "caution" message and the OFC processes the message.

The researchers set up the experiments so that the "risk" games and "ambiguity" games looked similar, to control for activity in the visual system so they could focus only on differences in decision making. In the "risk" games, each test subject was provided an opportunity to either choose a certain amount, like $3, or else choose a card that could be either red or blue. If the card was red, the test subject got $10, but if it came up blue, the test subject got nothing for that particular card.

In the risk games, each test subject was informed that the chance of drawing a red card was 50 percent, that there would be 10 of each color out of the total of 20 cards. Subjects made a series of 24 choices, with different sums of money at risk and different numbers of cards. In the ambiguity games, however, each test subject was told that the deck contained 20 cards, but was told nothing about how many were red and how many were blue.

As predicted from past experiments in which this type of risk was observed in test subjects, the researchers knew that the Caltech subjects with no brain damage would be more likely to draw cards in the risk game than in the ambiguity game, because people dislike betting when they do not know the odds. They were more likely to take sure amounts, which meant that their fear cost them money in expected value terms.

The patients at the University of Iowa Medical School, on the other hand, who had lesions to the OFC, played the game entirely differently. On average, these subjects with damage to the OFC were much more tolerant of risk and ambiguity.

Camerer says that the result with the brain-damaged test subjects fits well with the observation that many have suffered in their personal lives due to reckless financial decisions.

The research also addressed the intensity of the response in the brain as it correlates with degrees of risk. The results for the Caltech students showed more intense activity in the amygdala and OFC when the chance of winning is ambiguous, but there would be no such difference in patients with damage to those areas.

In sum, the results provide an important neurological understanding of how we humans handle risk in the real world, Camerer says.

"If you think about it, how often do you know the probability of success? Probably, the situation we modeled with the risk game is more the exception than the rule," he says. "In most situations, I think you are confronted with a risky choice in which you have little idea of the chances of different payoffs."

Does the study have any applications for society? Camerer says that our knowing what is happening at the most microscopic level in the neurons of the brain could lead to better understanding of bigger social effects. For example, a fear of the economic unknown will also create a strong preference for the familiar. In every country in the world, investors hold too many stocks they are familiar with, from their own countries, and do not diversify their stock holdings enough by buying ambiguous foreign stocks. The opposite of fear of the economic unknown may be driving entrepreneurs, who often thrive under uncertainty.

"It could be that aversion to ambiguity is like a primitive freezing response that we've had for millions of years," Camerer says. "In this case, it would be an economic freezing response."

The study is titled "Neural Systems Responding to Degrees of Uncertainty in Human Decision Making."

In addition to Camerer and Adolphs, the other authors are Ming Hsu and Meghana Bhatt, both graduate students in economics at Caltech; and Daniel Tranel of the University of Iowa College of Medicine.

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Science Historian Named Caltech/Huntington Professor

PASADENA, Calif.- A historian with interests as wide-ranging as entomology and Greek astronomy has become the first-ever Eleanor Searle Visiting Professor in the History of Science, a newly established joint program between the California Institute of Technology and the Huntington Library, Art Collections, and Botanical Gardens.

Ido Yavetz, assistant professor at The Cohn Institute for History of Science at Tel Aviv University in Israel, arrived in Pasadena this fall and will remain for the academic year. Yavetz specializes in history of classical electromagnetic field theory, history of electrical technology in the late 19th and early 20th centuries, history of entomology in the 19th century, and history of early Greek astronomy.

Through the scholar program, he will teach two courses at Caltech and conduct research at The Huntington, in the area of ancient Greek astronomy. Yavetz earned his bachelor's degree and did post-graduate work in physics while earning a master's and PhD in history of science, all at Tel Aviv University. He was a visiting professor at Caltech in 1999-2000.

Each year the scholar will be chosen by the Caltech faculty with the advice and consent of the director of research at The Huntington.

The goal of the scholar program is to bring visiting faculty to Caltech with a superb track record in teaching, who can inspire students to think about the role creativity plays in the scientific process. A different perspective on the challenges that Copernicus, Galileo, Da Vinci, Newton, and Einstein confronted in their work and how they overcame them could be enlightening to today's scientists. Simultaneously, faculty members have the opportunity to exercise their own creative instincts in conducting research at The Huntington to help inform their teaching.

"The Huntington and Caltech were born at roughly the same time as research institutes and have remained close ever since," says Robert C. Ritchie, W.M. Keck Director of Research at The Huntington. "This gift furthers our joint goals in the history of science and honors a great scholar who enriched the intellectual life of Caltech and The Huntington."

The program is named for Eleanor Searle, the first woman to hold a named professorship at Caltech. She was a world famous medieval historian, a popular teacher, and respected colleague during her time at Caltech, 1979 to 1993. She continued to conduct research at The Huntington until her death in 1999. The author of four books in medieval history that are still widely cited, her students and fellow faculty members were saddened when glaucoma cut short her career and forced her to retire early.

An anonymous local couple is funding $100,000 in annual program costs during their lifetimes. They have established a $2 million charitable remainder trust to eventually fund the Searle Visiting Professors Endowment and provide the program's permanent source of support.

ABOUT CALTECH: With an outstanding faculty, including five Nobel laureates, and such off-campus facilities as the Jet Propulsion Laboratory, Palomar Observatory, and the W.M. Keck Observatory, Caltech is one of the world's leading research centers. The Institute also conducts instruction in science and engineering for a student body of approximately 900 undergraduates and 1,200 graduate students who maintain a high level of scholarship and intellectual achievement. U.S. News & World Report continues to rank Caltech's undergraduate and graduate programs among the nation's best.

ABOUT THE HUNTINGTON: The Huntington Library, Art Collections, and Botanical Gardens is a collections-based research and educational institution serving scholars and the general public. More information can be found on the Web at www.huntington.org.

### Contact: Jill Perry, Caltech (626) 395-3226 jperry@caltech.edu

Traude Gomez, Huntington (626) 405-2260 tgomez@huntington.org

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Voting Experts Say Californians Should Make Sure Their November 8 Votes Are Counted

PASADENA, Calif.—The November 8 special election will allow California voters to decide on a number of initiatives rather than elect new people to statewide offices. But even though votes for a candidate will not be counted this time, the possibility of "lost" votes still exists, says an authority on voting at the California Institute of Technology.

"The experiences of recent elections have shown us all that we should continue expending some effort to make sure our votes count," says Michael Alvarez, a professor of political science at Caltech and codirector of the Caltech-MIT Voting Technology Project. The VTP researchers determined after the 2000 presidential election that up to six million votes had been lost.

Alvarez and his colleagues, who have devised seven steps for voters to take to ensure that their votes are counted, say these steps will be effective for the upcoming initiative election.

The announcement of the seven steps is being made as part of the ongoing voting project, which was initiated in December 2000 by Caltech president David Baltimore and former MIT president Charles Vest following the election debacle the previous month. The Caltech-MIT group, composed of both political scientists and engineers, is charged with evaluating the current state of reliability and uniformity of U.S. voting systems, establishing uniform attributes and quantitative guidelines for performance and reliability of voting systems, and proposing specific uniform guidelines and requirements for reliable voting systems.

The seven steps the group recommends are as follows:

1. Check that you are correctly registered to vote if you have recently moved, changed your name, or recently have filled out a voter registration form. If you are unable to check this on the Internet, call your local election office to make sure you are registered, that you are on your precinct's list of registered voters, and whether you need to bring a form of identification with you in order to vote. If you have any doubt, you should call as soon as possible. The telephone number for your local election office is available from directory assistance.

2. If for any reason there is a chance you cannot get to your local polling place on November 8, request an absentee ballot today or check with your county election official to see if early voting is being offered in your area.

3. Check your ballot. If you vote by mail, make sure to check for errors on your ballot before putting it into the envelope. Also, make certain you provide all required information, (especially your signature) on the envelope, and return your ballot early enough to ensure that your county election official receives it before polls close at 8 p.m. on November 8. You can return it by mailing it to your county election official, by dropping it off at any polling place or the county election office on election day, or by authorizing a legally allowed third person to return it for you.

4. Get a sample ballot from your local elections office if one hasn't been mailed to you, read it carefully, and bring it with you to vote. If you have received a sample ballot in the mail, this is a good time to make sure that your name and address are correct and that you know the location of your polling place. Your sample ballot contains a wealth of information and also provides a convenient way to double-check your registration information as well as consider your choices on the initiatives, which are complicated and require some study. You can mark your choices in your sample ballot and use it for reference when voting.

5. If your name does not appear on the list of registered voters at your polling place, and you believe you are registered to vote and are in the right precinct, you have the right to cast a provisional ballot.

6. Get informed. Read your voter information booklet and sample ballot. If you did not receive one or both, contact your election office immediately, as this might indicate a problem with your registration status.

7. Contact your election office with questions or for help. If you have easy Internet access, you can find the telephone number of your county election office at http://www.ss.ca.gov/elections/elections_d.htm. Or you can call the California Secretary of State's office at 1-800-345-VOTE for information on how to contact your county election office.

 

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Robert Tindol
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Preferring a Taste and Recognizing It May Involve Separate Brain Areas, Study Shows

PASADENA, Calif.—Are you disgusted when you hear about Elvis Presley's fried peanut butter 'n 'nanner sandwiches? A new study shows that it could all be in your head. In fact, our taste preferences may have little to do with whether we can even recognize the substance we're eating or drinking.

In the current issue of Nature Neuroscience, California Institute of Technology neuroscientist Ralph Adolphs and his colleagues at the University of Iowa report on their examinations of a patient whose sense of taste has been severely compromised. The patient suffered from a herpes brain infection years ago that left him with brain damage. Today, the patient is unable to name even familiar foods by taste or by smell, and shows remarkably little preference in his choice of food and drink.

According to Adolphs, who is a professor of psychology and neuroscience at Caltech, the subject is a 72-year-old man, known as "B," whose brain infection destroyed his amygdala, hippocampus, the nearby temporal cortices, and the insula, and damaged several other brain structures. As a result, the patient today has a memory span of about 40 seconds, somewhat similar to that of the character in the film Memento.

As a result of his extensive brain damage, B is unable to recognize familiar people and many objects, although his vision and his use of language are unaffected. In terms of taste, he fails to recognize any familiar food items, and could probably outdo even Elvis by wading into a banana and mayonnaise sandwich with gusto.

"Our likes and dislikes in taste stem from both innate and cultural causes," Adolphs explains. "You may like sushi or bitter melon or certain smelly cheeses, whereas other people turn away from these foods in distaste."

The research shows that it may be possible to like or dislike certain foods without being able to recognize them at all, and that different regions of the brain are responsible for these two processes.

To test this hypothesis, the researchers set up an experiment in which B, several other subjects with brain damage, and several normal subjects were all offered salty and sweet drinks. All the subjects drank the sweet drinks and said they enjoyed them, and all with the notable exception of B said they found the saline drink disgusting.

By contrast, B drank the saline solution with a pleased expression, saying it "tasted like pop." However, when he was asked to sip both a salty and a sweet drink and to continue drinking the one he preferred, he chose the sweet one and took a pass on the salty one.

The researchers concluded that B, like most people, has some fundamental preference for sweet drinks over salty ones-which goes far to explain why soft drinks have always been made with sugar rather than salt-even if he is unaware of the identity of either. In sum, it would seem that B has no preference for drinks unless he can compare them within the 40-second span of his memory.

What does this mean for us regular tasters? According to Adolphs, taste information "that is meaningless for an isolated individual stimulus can yield relative values when the taste is structured as a comparison." In other words, there's something in your brain that indeed has a preference for a sweet drink over a salty one, but there's something else in your brain that disgusts you when you're given a salty drink when you know you could've had a cola.

The research was supported by grants from the National Institute of Mental Health and the National Institute of Neurological Disorders and Stroke. The paper's coauthors are Daniel Tranel, Michael Koenigs, and Antonio R. Damasio, all of the University of Iowa's Department of Neurology and Neuroscience.

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Caltech Neuroscientist Receives Grant to Study How Autistic Patients Process Facial Information

PASADENA, Calif.--Ralph Adolphs, a neuroscientist at the California Institute of Technology, has been awarded a $120,000 grant from the Cure Autism Now foundation to study the way that autistic patients process information about other people's facial expressions.

The award will supplement Adolphs's ongoing work to understand the role of a brain structure, known as the amygdala, in certain disorders that make it difficult for sufferers to interpret other people's emotions. Adolphs is a professor of psychology and neuroscience at Caltech and holds a joint appointment at the University of Iowa College of Medicine.

According to Adolphs, the grant will lead to progress in understanding how the amygdala may be involved in autism, and also to possible ways for people with autism to improve their social functioning.

Earlier studies have shown that persons with autism have a hard time looking with sufficient attention at the faces of other people to read emotions. Yet, there is tantalizing evidence that the problem may not be entirely an inability to read facial expressions, but rather the lack of ability to focus attention on faces so that expressions can even be processed. Therefore, better knowledge of how people with autism look at faces could result in intervention strategies where they could be coached to focus their attention on facial expressions, even though they have no natural inclination to do so.

The pilot research award will be earmarked for a two-year period. Adolphs says that the first year of funding will involve a close study of how subjects view faces, followed in the second year with fMRI studies using Caltech's new scanners.

"If our hypotheses are supported, the implications might be dramatic for rehabilitation," Adolphs says. "In a sense, we could be helping people with autism to see the world socially by telling them specifically how to look at the world with their eye movements."

Founded in 1995, the Cure Autism Now foundation is an organization of parents, clinicians, and leading scientists committed to accelerating the pace of biomedical research in autism through research, education, and outreach.

Since its founding, the organization has committed over $23 million in research, the establishment of and ongoing support for the Autism Genetic Resource Exchange, and numerous outreach and awareness activities aimed at families, physicians, governmental officials, and the general public.

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Matthew O. Jackson Named Guggenheim Fellow

PASADENA, Calif.- Matthew O. Jackson, the Edie and Lew Wasserman Professor of Economics at the California Institute of Technology, has received a John Simon Guggenheim Memorial Foundation Fellowship. Jackson is one of 186 fellowship recipients, who include artists, scholars, and scientists.

Jackson's research focuses on modeling the collections of relationships between individuals, called social networks, in an attempt to understand phenomena as diverse as friendships, computer virus transmission, and employment trends. Through developing these models of social networks, Jackson hopes to understand how specific patterns of social relationships arise, how group behaviors can be predicted, and how relationships could be made more efficient inside a group. One application of interest to Jackson is modeling labor markets with respect to socio-economic background. He seeks to answer questions about how an individual's background influences employment and wage prospects. Social network models may also provide insights into possible policies to alleviate unemployment among specific socio-economic groups.

The Guggenheim Fellowship will help fund Jackson's research while he is on leave at the Center for Advanced Studies in Behavioral Sciences (CASBS) in Palo Alto for the 2005-2006 academic year. While at CASBS, Jackson will examine the diffusion of information through social networks and how it affects behaviors, in particular voting behaviors.

The John Simon Guggenheim Memorial Foundation has granted $240 million in fellowships to over 15, 500 individuals in the arts, humanities, and sciences, since 1925. Past Guggenheim fellows include Nobel laureates and Pulitzer Prize winners.

### Written by: Michael Torrice, Media Relations Intern Contact: Jill Perry (626) 395-3226 jperry@caltech.edu Visit the Caltech Media Relations Web site at: http://pr.caltech.edu/media

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Scientists Use fMRI to Catch Test Subjectsin the Act of Trusting One Another

PASADENA, Calif.--Who do you trust? The question may seem distinctly human--and limited only to "quality" humans, at that--but it turns out that trust is handled by the human brain in pretty much the same way that obtaining a food award is handled by the brain of an insect. In other words, it's all a lot more primitive than we think.

But there's more. The research also suggests that we can actually trust each other a fair amount of time without getting betrayed, and can do so just because of the biological creatures we are.

In a new milestone for neuroscience, experimenters at the California Institute of Technology and the Baylor College of Medicine for the first time have simultaneously scanned interacting brains using a new technique called "hyperscanning" brain imaging to probe how trust builds as subjects learn about one another. This new technique allowed the team to see for the first time how interacting brains influence each other as subjects played an economic game and built trusting relationships. The research has implications for further understanding the evolution of the brain and social behavior, and could also lead to new insights into maladies such as autism and schizophrenia, in which a person's interaction with others is severely compromised.

Reporting in Friday's issue of the journal Science, the Caltech and Baylor researchers describe the results they obtained by hooking up volunteers to functional magnetic resonance imaging (fMRI) machines in Pasadena and Houston, respectively. One volunteer in one locale would interact with another volunteer he or she did not know, and the two would play an economic game in which trustworthiness had to be balanced with the profit motive. At the time the volunteers were playing the game, their brain activity was continually monitored to see what was going on with their neurons.

According to Steve Quartz, associate professor of philosophy and director of the Social Cognitive Neuroscience Laboratory at Caltech, who led the Caltech effort and does much of his work on the social interactions of decision making by employing MRIs, the results show that trust involves a region of the brain known as the head of the caudate nucleus. As with all MRI images of the brain, the idea was to pick up evidence of a rush of blood to a specific part of the brain, which is taken to indicate evidence that the brain region is at that moment involved in mental activity.

The important finding, however, was not just that the caudate nucleus is involved, but that trust tended to shift backward in time as the game progressed. In other words, the expectation of a reward was intimately involved in an individual's assessment of trustworthiness in the other individual, and that the recipient tended to become more trusting prior to the reward coming--provided, of course, that there was no backstabbing.

Colin Camerer, the Axline Professor of Business Economics at Caltech and the other Caltech faculty author of the paper, adds that the study is also a breakthrough in showing that game theory continues to reward researchers who study human behavior.

"The theory about games such as the one we used in this study is developed around mathematics," Camerer says. "But a mathematical model of self-interest can be overly simplified. These results show that game theory can draw together the social and biological sciences for new and deeper understandings of human behavior. A better mathematical model will result."

The game is a multiround version of an economic exchange, in which one player (the "investor") is given $20 and told that he can either hold on to the money, or give some or all of it to the person on the other end of the game 1,500 miles away. The game is anonymous, and it is further assumed that the players will never meet each other, in order to keep other artifacts of social interaction from coming into play.

The person on the receiving end of the transaction (the "trustee") immediately has any gift that he receives tripled. The trustee can then give some or all of it back to the investor.

In ideal circumstances, the investor gives the entire $20 to the trustee, who then has his money tripled to $60 and then gives $30 back to the investor so that both have profited. That's assuming that greed hasn't made the trustee keep all the money for himself, of course, or that stinginess or lack of trust has persuaded the investor to keep the original investment all to himself. And this is the reason that trust is involved, and furthermore, the reason that there is brain activity during the course of the game for the experimenters to image.

The findings are that trust is delayed in the early rounds of the game (there are 10 in all), and that the players begin determining the costs and benefits of the interchange and soon begin anticipating the rewards before they are even bestowed. Before the game is finished, one player is showing brain activity in the head of the caudate nucleus that demonstrates he has an "intention to trust." Once the players know each other by reputation, they begin showing their intentions to trust about 14 seconds earlier than in the early rounds of the game.

The results are interesting on several levels, say Camerer and Quartz. For one, the results show the neuroscience of economic behavior.

"Neoclassical economics starts with the assumption that rational self-interest is the motivator of all our economic behavior," says Quartz. "The further assumption is that you can only get trust if you penalize people for non-cooperation, but these results show that you can build trust through social interaction, and question the traditional model of economic man."

"The results show that you can trust people for a fair amount of time, which contradicts the assumptions of classical economics," Camerer adds.

This is good news for us humans who must do business with each other, Quartz explains, because trustworthiness decreases the incidental costs. In other words, if we can trust people, then the costs of transactions are lower and simpler: there are fewer laws to encumber us, fewer lawyers to pay so as to ensure that all the documents pertaining to the deal are written in an airtight manner, and so on.

"It's the same as if you could have a business deal on a handshake," Quartz says. "You don't have to pay a bunch of lawyers to write up what you do at every step. Thus, trust is of great interest from the level of our everyday interactions all the way up to the economic prosperity of a country where trust is thought of in terms of social capital."

The research findings are also interesting in their similarity to classical conditioning experiments, in which a certain behavioral response is elicited through a reward. Just as a person is rewarded for trusting a trustworthy person--and begins trusting the person even earlier if the reward can honestly be expected--so, too, does a lab animal begin anticipating a food reward for pecking a mirror, tripping a switch, slobbering when a buzzer sounds, or running quickly through a maze.

"This is another striking demonstration of the brain re-using ancient centers for new purposes. That trust rides on top of the basic reward centers of the brain is something we had never anticipated and demonstrates how surprising brain imaging can be," Quartz notes.

And finally, the research could have implications for better understanding the neurology of individuals with severely compromised abilities to interact with other people, such as those afflicted with autism, borderline personality disorders, and schizophrenia. "The inability to predict others is a key facet of many mental disorders. These new results could help us better understand these conditions, and may ultimately guide new treatments," suggests Quartz.

The other authors of the article are Brooks King-Casas, Damon Tomlin and P. Read Montague (the lead author), all of the Baylor College of Medicine, and Cedric Anen of Caltech. The title of the paper is "Getting to Know You: Reputation and Trust in a Two-Person Economic Exchange."

Writer: 
Robert Tindol
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