Journal of Economic Behavior & Organization 94 (2013) 222–233 Contents lists available at ScienceDirect Journal of Economic Behavior & Organization j ourna l ho me pag e: www.elsevier.com/locate/jebo You cannot gamble on others: Dissociable systems for strategic uncertainty and risk in the brain W. Gavin Ekins a,∗ , Ricardo Caceda b , C. Monica Capra a , Gregory S. Berns a,∗ a Center for Neuropolicy and Economics Department, Emory University, Atlanta, GA 30322, USA b Department of Psychiatry and Behavioral Science, University of Miami, Coral Gables, FL 33124, USA a r t i c l e i n f o Article history: Received 10 April 2012 Received in revised form 20 February 2013 Accepted 18 July 2013 Available online 30 July 2013 Keywords: Game theory Neuroeconomics Experimental economics Strategic uncertainty Risk a b s t r a c t This paper tests whether strategic uncertainty employs circuits in the brain that encode risk and utility, or circuits that are involved in Theory of Mind (ToM). We compare participants’ decisions in a stag-hunt game with an equivalent choice between Bernoulli lotteries where the probabilities are equal to the mixed Nash equilibrium of the stag hunt game. Behavioral data suggests that most participants are more willing to choose the payoff-dominant option in a stag-hunt game than the equivalent lottery. Neuroimaging shows that activations in the regions of the brain commonly associated with ToM are correlated with a participant’s propensity to choose payoff dominant. This suggests that individuals who mentalize the other person are more likely to be cooperative than those who do not. © 2013 Elsevier B.V. All rights reserved. 1. Introduction The gains from cooperation can be immense. When individuals are uncertain of others’ commitment to a task, cooperation often fails. This uncertainty of another person’s actions is referred to as strategic uncertainty. Economists have debated whether strategic uncertainty is a function of converting the other players’ payoffs into probabilities of their actions and making an assessment of the risk. Game theorists and economists have argued that individuals are unlikely to randomize and equally unlikely to believe that others randomize (Radner and Rosenthal, 1982; Aumann, 1987; Huyck et al., 1990; Rubinstein, 1991). The extent to which strategic uncertainty differs from risk in the brain has not been studied. This paper seeks to find neural substrates that are unique to strategic uncertainty by contrasting it with tasks involving only risk. Rousseau’s stag hunt story encapsulates the incentives of strategic uncertainty. In his story, two hunters set out to hunt a deer. Each man must keep a post in order to capture a deer. While one hunter is manning his post, a hare passes in front of him. At this point the hunter is faced with a decision: continue to man his post or attempt to chase the hare. Both hunters would rather have the deer than the hare; the deer provides the greatest amount of food for both hunters. The only reason for the hunter to chase the hare is if he believes the other has abandoned his post in an attempt to capture smaller game. In other words, if one hunter fears the other hunter will abandon his post, then his best response is to chase the hare (Skyrms, 2001). What is puzzling in Rousseau’s story, which is the inspiration behind the stag-hunt game, is that it lacks a direct incentive to be uncooperative. Unlike the prisoner’s dilemma game, in which it is profitable to be uncooperative; uncooperative behavior in the stag hunt game is a consequence of mistrusting the other player’s motivations. Cooperation has the greatest payoff, both socially and individually; but the mistrust of each other’s motives leads the players to forgo the optimal outcome ∗ Corresponding authors. E-mail addresses: wekins@emory.edu (W.G. Ekins), gberns@emory.edu (G.S. Berns). 0167-2681/$ – see front matter © 2013 Elsevier B.V. All rights reserved. http://dx.doi.org/10.1016/j.jebo.2013.07.006