02), an effect due to only trading in bubble markets (nonbubble markets: p > 0.1; bubble markets: p = 0.005). Critically, low monetary earnings did not directly correlate with activity in vmPFC (p = 0.19), excluding the possibility that the correlation we identified in this region reflected increasing susceptibility to reduced earnings (independent of bubble susceptibility). Our next step was to investigate the mechanism causing the inflation in value representation observed in vmPFC during financial bubbles. The key difference between nonbubble markets and bubble markets is that in nonbubble markets, the value of a share is only determined by

the fundamental value of the asset, while in bubble markets, profitable trading depends on accurately judging Selleckchem Ribociclib Enzalutamide the intentions of other players in the market. Therefore, we hypothesized that the increase in value representation during a bubble market was a consequence of the fact that traders use inferences about the intentions and mental states of other agents to update their value representation. This hypothesis was supported by the fact that in our whole-brain analysis, together with increased

activity in vmPFC, we isolated a network of brain regions that have previously been associated with theory of mind (Siegal and Varley, 2002, Frith and however Frith, 2006 and Saxe, 2006), such as temporoparietal junction (L-TPJ; [−48, −52, 25], t = 3.68), precuneus ([6, −43, 49], t = 4.9), and dorsomedial PFC (dmPFC; [9, 50, 28], t = 3.47) (Figure 3A; for a complete list of activations see also Table

S1). In particular, we focused on dmPFC because convergent evidence suggests that this region of the prefrontal cortex plays a primary role in human ability to make inferences about the mental states (including intentions) of other agents (Siegal and Varley, 2002 and Amodio and Frith, 2006), enabling strategic thinking (Hampton et al., 2008). Furthermore, a previous study has shown that in experimental financial markets, activity in this area correlates with participants’ ability to predict price changes in markets due the presence of informed insider traders in the market (Bruguier et al., 2010). If activity isolated in dmPFC during bubble markets reflected mentalizing ToM activity, then we would expect a measure of neural signal change in that region during bubble markets to be associated with individual-specific measures of ToM. To test this hypothesis further, we retested a subset of participants (n = 14) who had originally participated in the bubble experiment using an online version of the eye gaze test to assess their ToM skills (Baron Cohen et al., 2001).