Cognitive and neural mechanisms of social influence in decision making

Often insufficient information creates a situation in which we are forced to decide under uncertainty. In such a situation the behavior of others can complement private information and decisively influence a final decision. In many cases relying on the behavior of others is a good strategy and results in more accurate decisions. However, from time to time the information derived from the behavior of others is wrong and relying on such misleading information can trigger herds with destructive consequences (e.g., on the stock market). To better understand how herding behavior develops, methods from computational modeling and neuroscience were combined with theories from social psychology and economics. In the first manuscript a straightforward categorization task was analyzed with a prominent computational model to describe how opinions from others can influence the decision process. That people often treat private information in a privileged way is shown in a second manuscript. It suggests a neural mechanism on how overweighting of private information changes belief updating. Understanding this process is important, as overweighting of private information can decrease the probability that herds develop. Importantly, if private information is overweighted strongly depends on the type of social information, which is shown in a third and final manuscript. The analyses demonstrate that private information is only overweighted as compared to social information derived from the decisions of equally ranked others, but not as compared to social information derived from higher ranked others. In sum, this dissertation sheds light on social influence and the development of herding behavior by studying individual decisions on the psychological and neural level of implementation. Even herding behavior is a group phenomenon it ultimately rests on the wrong decisions of individuals. A better understanding of the associated mechanisms is crucial for the understanding of how fatal herds, as the ones on the stock market, can develop.