Aldo Rustichini

Aldo Rustichini
University of Minnesota Twin Cities | UMN · Department of Economics

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235
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Publications

Publications (235)
Article
Full-text available
Deciding the best action in social settings requires decision-makers to consider their and others’ preferences, since the outcome depends on the actions of both. Numerous empirical investigations have demonstrated variability of behavior across individuals in strategic situations. While prosocial, moral, and emotional factors have been intensively...
Article
We relate two main representations of the cost of acquiring information: a cost that depends on the experiment performed, as in statistical decision theory, and a cost that depends on the distribution of posterior beliefs, as in applications of rational inattention. We show that in many cases of interest, posterior-based costs are inconsistent with...
Article
We provide two characterizations, one axiomatic and the other neuro-computational, of the dependence of choice probabilities on deadlines, within the widely used softmax representation $$ \begin{align} p_{t}\left(a,A\right) =\dfrac{e^{\frac{u\left( a\right) }{\lambda\left( t\right) }+\alpha\left( a\right) }}{\sum_{b\in A}e^{\frac{u\left( b\right) }...
Preprint
Full-text available
Previous research in the field of personality neuroscience has identified associations of conscientiousness and related constructs like impulsivity and self-control with structural and functional properties of particular regions in the prefrontal cortex (PFC) and insula. Network-based conceptions of brain function suggest that these regions probabl...
Preprint
Previous research in the field of personality neuroscience has identified associations of conscientiousness and related constructs like impulsivity and self-control with structural and functional properties of particular regions in the prefrontal cortex (PFC) and insula. Network-based conceptions of brain function suggest that these regions probabl...
Article
Full-text available
We consider random choice rules that, by satisfying a weak form of Luce’s choice axiom, embody a form probabilistic rationality. We show that for this important class of stochastic choices, the law of demand for normal goods—arguably the main result of traditional consumer theory—continues to hold on average when strictly dominated alternatives are...
Article
Full-text available
We study how strategic interaction and cooperation are affected by the heterogeneity of cognitive skills of groups of players, over consecutive plays of repeated games with randomly matched opponents using Prisoner’s Dilemma as stage game. We observe overall higher cooperation rates and average final payoffs in integrated treatment groups – where s...
Article
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Significance The strong correlation between education and voting is among the most robust findings in social science. We show that genes associated with the propensity to acquire education are also associated with higher voter turnout. A within-family analysis suggests education-linked genes exert direct effects on voter turnout but also reveals ev...
Article
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We investigate in a laboratory setting whether revealing information on intelligence affects behavior in games with repeated interactions. In our experimental design we communicate information on the cognitive ability of both players. We use three stage games: Prisoners' Dilemma (PD) and two versions of Battle of Sexes (BoS), with high and low payo...
Article
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Similarities between parent and offspring are widespread in psychology; however, shared genetic variants often confound causal inference for offspring outcomes. A polygenic score (PGS) derived from genome-wide association studies (GWAS) can be used to test for the presence of parental influence that controls for genetic variants shared across gener...
Article
We prove that a random choice rule satisfies Luce's Choice Axiom if and only if its support is a choice correspondence that satisfies the Weak Axiom of Revealed Preference, thus it consists of alternatives that are optimal according to some preference, and random choice then occurs according to a tie-breaking mechanism among such alternatives that...
Article
The Boltzmann distribution family describes a single parameter (temperature) class of probability distributions over a state space; at any given temperature, the ratio of probabilities of two states depends exponentially on their difference in energy. Beyond physics, this distribution family is very popular in many important disciplines, under diff...
Preprint
We prove that a random choice rule satisfies Luce's Choice Axiom if and only if its support, the set of "alternatives that can be chosen," is a choice correspondence that satisfies the Weak Axiom of Revealed Preference, and random choice occurs according to a stochastic tie breaking among optimizers that satisfies Renyi's Conditioning Axiom. Our re...
Article
We investigated intergenerational educational and occupational mobility in a sample of 2,594 adult offspring and 2,530 of their parents. Participants completed assessments of general cognitive ability and five noncognitive factors related to social achievement; 88% were also genotyped, allowing computation of educational-attainment polygenic scores...
Preprint
The Boltzmann distribution describes a single parameter (temperature) family of probability distributions over a state space; at any given temperature, the ratio of probabilities of two states depends on their difference in energy. The same family is known in other disciplines (economics, psychology, computer science) with different names and inter...
Preprint
We provide two characterizations, one axiomatic and the other neuro-computational, of the dependence of choice probabilities on deadlines, within the widely used softmax representation \[ p_{t}\left( a,A\right) =\dfrac{e^{\frac{u\left( a\right) }{\lambda \left( t\right) }+\alpha \left( a\right) }}{\sum_{b\in A}e^{\frac{u\left( b\right) }{\lambda \l...
Article
Theory of Mind (ToM), the ability to correctly attribute mental states to others, is important in social interactions. We evaluate the development of ToM in about 800 mostly disadvantaged young children. We next conduct a field experiment with about 160 children in which we find that the low ToM rates for these disadvantaged children improve substa...
Preprint
Full-text available
Individuals learn by comparing the outcome of chosen and un-chosen actions. A negative counterfactual value signal is generated when this comparison is unfavorable. This can happen in private as well as in social settings-where the foregone outcome results from the choice of another person. We hypothesized that despite sharing similar features such...
Article
Full-text available
https://doi.org/10.1162/jocn_a_01372 - Individuals learn by comparing the outcome of chosen and unchosen actions. A negative counterfactual value signal is generated when this comparison is unfavorable. This can happen in private as well as in social settings—where the foregone outcome results from the choice of another person. We hypothesized th...
Preprint
*Journal of Political Economy Link* https://www.journals.uchicago.edu/doi/pdfplus/10.1086/674409 *Full Bibliographic Reference* Gurdal, M.Y., Miller, J.B., & Rustichini, A. (2013), Why Blame?, Journal of Political Economy, Vol. 121, No. 6, pp. 1205-1246 ********************************************************* We provide experimental evidence that...
Article
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Conscientiousness is a personality trait associated with many important life outcomes, but little is known about the mechanisms that underlie it. We investigated its neural correlates using functional connectivity analysis in fMRI, which identifies brain regions that act in synchrony. We tested the hypothesis that a broad network resembling a combi...
Article
Full-text available
During economic decisions, offer value cells in orbitofrontal cortex (OFC) encode the values of offered goods. Furthermore, their tuning functions adapt to the range of values available in any given context. A fundamental and open question is whether range adaptation is behaviorally advantageous. Here we present a theory of optimal coding for econo...
Poster
Full-text available
STUDY’S OBJECT Most of real life interactions are repeated, rather than isolated, meetings. Such repeated strategic interactions are modeled in game theory (GT) as repeated (or stochastic) games, where the players play a sequence of the same (or different) single-shot game. The theory of repeated games assumes that players choose actions in a game...
Preprint
Full-text available
During economic decisions, neurons in orbitofrontal cortex (OFC) encode the values of offered goods. Importantly, their responses adapt to the range of values available in any given context. Prima facie, range adaptation seems to provide an efficient representation. However, uncorrected adaptation in the encoding of offer values would induce arbitr...
Article
We suggest that overconfidence (conscious or unconscious) is motivated in part by strategic considerations, and test this experimentally. We find compelling supporting evidence in the behavior of participants who send and respond to others’ statements of confidence about how well they have scored on an IQ test. In two-player tournaments where the h...
Article
The link between diagnoses of psychotic disorders and attenuated white matter connectivity is well established, but little is known about the degree to which similar white matter differences predict traits linked to psychosis-proneness in the general population. Moreover, intelligence is too rarely considered as a covariate in neural endophenotype...
Article
Correlative evidence suggests that testosterone promotes dominance and aggression. However, causal evidence is scarce and offers mixed results. To investigate this relationship, we administered testosterone for 48h to 41 healthy young adult men in a within-subjects, double-blind placebo-controlled balanced crossover design. Subjects played the role...
Article
We provide evidence on how cooperation rates vary across payoff parameters in the Prisoner's Dilemma (PD), using four one-shot games that differ only in the payoffs from mutual cooperation. In our experiment, participants play only the PD game, and play the game once and only once, so there are no potential confounds or methodological issues. Our r...
Article
We study the role of hard and soft skills in economic performance and social mobility in a sample of twins (N = 2,764) from the Minnesota Twin Family Study, combining classical economic models of parental investment with a complete and realistic equilibrium model of genetic transmission of skills. Hard and soft skills have comparable roles in affec...
Article
Economics and trait-based personality psychology have taken different approaches to understanding individual differences. The former emphasizes variables measured according to formal decision theory; the latter instead emphasizes variables derived from the factor analysis of trait assessments. In a data set on trainee truckers in a large US company...
Article
Educational attainment is strongly influenced by social and other environmental factors, but genetic factors are estimated to account for at least 20% of the variation across individuals1. Here we report the results of a genome-wide association study (GWAS) for educational attainment that extends our earlier discovery sample1, 2 of 101,069 individu...
Article
Temporal discounting (TD), the preference for earlier, smaller rewards over delayed, larger rewards, is a pervasive phenomenon that covaries with Big Five personality traits and Intelligence (IQ). This study provides novel insight by identifying correlates for IQ and Extraversion in the neural representation of TD preferences. An intertemporal choi...
Article
Objective: There is considerable evidence that college attainment is associated with family background and cognitive and non-cognitive skills. Behavioral genetic methods are used to determine whether the family background effect is mediated through cognitive and non-cognitive skill development. Method: We analyze data from two longitudinal behav...
Article
The hypothesis that price stability would reliably increase with the fraction of women operating in financial markets has been frequently suggested in policy discussions. To test this hypothesis we conducted 10 male-only, 10 female-only and 10 mixed-gender experimental asset markets, and compared the effects of gender composition, confidence, risk...
Article
Research on the link between intelligence and economic decision making is a recent development in the more general attempt to introduce theories of individual differences and personality traits into the analysis of economic behavior. We lay down here what we know from behavioral studies, from imaging studies, both functional and anatomical, and ins...
Article
Full-text available
Recent advances in the field of cognitive neuroscience have revealed that direct gaze modulates activity in cortical and subcortical key regions of the 'social brain network', including the inferior frontal gyrus (IFG) and the anterior rostral medial prefrontal cortex (arMPFC). However, very little is known about how direct gaze is processed during...
Article
Full-text available
Neuronal recordings and lesion studies indicate that key aspects of economic decisions take place in the orbitofrontal cortex (OFC). Previous work identified in this area three groups of neurons encoding the offer value, the chosen value and the identity of the chosen good. An important and open question is whether and how decisions could emerge fr...
Article
Full-text available
This study examined the association between size of the caudate nuclei and intelligence. Based on the central role of the caudate in learning, as well as neuroimaging studies linking greater caudate volume to better attentional function, verbal ability, and dopamine receptor availability, we hypothesized the existence of a positive association betw...
Article
Full-text available
We study a two-period economy in which agents' preferences take into account their relative economic position. The study builds on a decision theoretic analysis of the social emotions that underlie these relative concerns. These emotions, envy and pride, respond to social losses and gains, respectively. Our main result is that envy leads to conform...
Article
We collected multiple measures from 100 students at a small public undergraduate liberal arts college in the Midwestern US and later assessed their academic success. The “proactive” (hard-working, persistent) aspect of the Big Five trait of Conscientiousness and not its “inhibitive” (organized, careful) aspect is a large positive predictor for two...
Article
Maccheroni, Marinacci, and Rustichini (2006), in an Anscombe–Aumann framework, axiomatically characterize preferences that are represented by the variational utility functional V(f)=minp∈Δ{∫u(f)dp+c(p)}∀f∈F, where u is a utility function on outcomes and c is an index of uncertainty aversion. In this paper, for a given variational preference, we stu...
Article
We study the association between smoking status and individual decisions, focusing on outcomes in the domain of personal finance. The study draws information on demographic variables, various financial outcomes including individual credit scores, time and risk preferences, and personality traits, from both population data and experimental data. The...
Article
Full-text available
We study a two-period economy in which agents' preferences take into account their relative economic position. The study builds on a decision theoretic analysis of the social emotions that underlie these relative concerns. These emotions, envy and pride, respond to social losses and gains, respectively. Our main result is that envy leads to conform...
Article
Full-text available
Human strategic interaction requires reasoning about other people's behavior and mental states, combined with an understanding of their incentives. However, the ontogenic development of strategic reasoning is not well understood: At what age do we show a capacity for sophisticated play in social interactions? Several lines of inquiry suggest an imp...
Article
Given a functional defined on a nonempty subset of an Archimedean Riesz space with unit, necessary and sufficient conditions are obtained for the existence of a (convex or concave) niveloid that extends the functional to the entire space. In the language of mathematical finance, this problem is equivalent to the one of verifying if the policy adopt...
Article
Full-text available
Adaptive Coding is the property of the brain to adjust its response to statistical properties of the environment. Its effect is an improved discrimination among signals under the constraints on the dynamic range of its response. It can thus be considered the neural correspondent of Rational Attention, which models how a rational decisionmaker alloc...
Article
Temporal discounting (TD), the preference for earlier, smaller rewards over delayed, larger rewards, is a pervasive phenomenon that covaries with Big Five personality traits and Intelligence (IQ). This study provides novel insight by identifying correlates for IQ and Extraversion in the neural representation of TD preferences. An intertemporal choi...
Article
The nature of the relationship between cognitive skills and economic preferences - in particular risk aversion and impatience – remains a key question in economics and psychology. Here we investigate the functional relationship between intelligence (IQ) and preferences for risk, by examining subject’s evaluation of probabilistic feedback during a s...
Article
The relation between intelligence (IQ) and neural responses to monetary gains and losses were investigated in a simple decision task. In 94 healthy adults, typical responses of striatal BOLD signal after monetary reward and punishment were weaker for subjects with higher IQ. IQ-moderated differential responses to gains and losses were also found fo...
Article
We provide experimental evidence that subjects blame others on the basis of events they are not responsible for. In our experiment an agent chooses between a lottery and a safe asset; payment from the chosen option goes to a principal, who then decides how much to allocate between the agent and a third party. We observe widespread blame: regardless...
Article
Full-text available
The scientific debate on the relation between Gross Domestic Product (GDP) and self reported indices of life satisfaction is still open. In a well-known finding, Easterlin reported no significant relationship between happiness and aggregate income in time-series analysis. However, life satisfaction appears to be strictly monotonically increasing wi...
Article
Evidence from both psychology and economics indicates that individuals give statements that appear to overestimate their ability compared to that of others. We test three theories that predict such relative overconfidence. The first theory argues that overconfidence can be generated by Bayesian updating from a common prior and truthful statements i...
Article
Full-text available
A genome-wide association study (GWAS) of educational attainment was conducted in a discovery sample of 101,069 individuals and a replication sample of 25,490. Three independent single-nucleotide polymorphisms (SNPs) are genome-wide significant (rs9320913, rs11584700, rs4851266), and all three replicate. Estimated effects sizes are small (coefficie...
Article
Full-text available
We measure the other-regarding behavior in samples from three related populations in the upper Midwest of the United States: college students, non-student adults from the community surrounding the college, and adult trainee truckers in a residential training program. The use of typical experimental economics recruitment procedures made the first tw...
Article
We test experimentally an explanation of over and under confidence as motivated by (perhaps unconscious) strategic concerns, and find compelling evidence supporting this hypothesis in the behavior of participants who send and respond to others' statements of confidence about how well they have scored on an IQ test. In two-player tournaments where t...
Article
In economics and in the social sciences, the study of decision making of the single individual is an important preliminary step to provide a sound foundation for the analysis of equilibria in economic and social systems. Neuroeconomic analysis of the process has been a recent fruitful development in this direction. In the more recent past a new dir...
Article
Full-text available
We show with a laboratory experiment that individuals adjust their moral principles to the situation and to their actions, just as much as they adjust their actions to their principles. We first elicit the individuals’ principles regarding the fairness and unfairness of allocations in three different scenarios (a Dictator game, an Ultimatum game, a...
Article
We show that personality traits mediate the e ect of income on Life Satisfaction. The e ect is strong in the case of Neuroticism, which measures the sensitivity to threat and punishment, in both the British Household Panel Survey and the German Socioeconomic Panel. Neuroticism increases the usually observed concavity of the relationship: Individual...
Article
Full-text available
Trait-based personality psychology and economics have taken different approaches to understanding individual differences, with the former emphasizing variables derived from the factor analysis of trait assessments, and the latter emphasizing variables derived from formal decision theory. In a data set on trainee truckers in a large US company, we p...
Article
Full-text available
Recent literature emphasizes the role that testosterone, as well as markers indicating early exposure to T and its organizing effect on the brain (such as the ratio of second to fourth finger, [Formula: see text]), have on performance in financial markets. These results may suggest that the main effect of T, either circulating or in fetal exposure,...
Article
Economists and psychologists have devised numerous instruments to measure time preferences and have generated a rich literature examining the extent to which time preferences predict important outcomes; however, we still do not know which measures work best. With the help of a large sample of non-student participants (truck driver trainees) and adm...
Article
We study experimentally the effect on individual behavior of comparative, but payoff-irrelevant, information in a near-minimal group setting. Specifically, in each round, group members see the groups’ cumulative payoffs, which consist of an aggregation of the earnings of each member of the group in the round. Our novel experimental design incorpora...
Article
Full-text available
We collect information on prenatal testosterone in a large sample of entrepreneurs by measuring the length of their 2th to 4th fingers in face to face interviews. Entrepreneurs with higher exposure to prenatal testosterone (lower second to fourth digit ratio) manage larger firms, are matched with larger firms when acquire control and experience fas...
Article
Full-text available
The ratio of second to fourth digit (2D4D) has been shown to correlate negatively with entrepreneurial skills and financial success. We document that in a sample of entrepreneurs women have a lower 2D4D ratio than men, in sharp contrast with the features of the distribution in random samples. Exploiting variation across communities in indices corre...