Which is More Important, Proposer Identity or Allocation Motive? Event-Related Potential in Economic Decision-Making

Most studies have supported the view that individuals prefer to reward the in-group and discriminate against the out-group in response to unfair offers in the Ultimatum Game. However, the current study advanced a different view, that is, the "black sheep effect", in which in-group members were punished more severely compared with out-group members. This study aimed to incorporate proposer identity and allocation motive as possible explanations for offer rejection.

In the current study, the in-group and out-group identities were distinguished by their health condition, and the allocation motive was defined according to its benefit maximization. With a total of 89 healthy college student participants, a mixed design of 2 (proposer identity: out-group vs in-group) × 2 (allocation motive: selfish vs random) × 2 (offer type: unfair vs fair) was used in the Ultimatum Game. Event-related potential (ERP) technology was used, and ERPs were recorded while participants processed the task.

The behavioral result showed that the "black sheep effect" was found on the fair offer when a random allocation motive was used. Our ERP result suggested that feedback-related negativity (FRN) and P300 were modulated by proposer identity but not by allocation motive. However, the allocation motive interacted with proposer identity affecting FRN and P300 when the fair offer was proposed.

These findings demonstrated that the "black sheep effect" was related to the experience of the out-group member, such as disadvantage or distress, but it was also modulated by allocation motive. Meanwhile, the out-group (depressed college students) captured more attention because they violated individual expectations, according to the P300. This finding plays an integral role in understanding the mechanism of response to the "black sheep effect".