From the piggy bank to Wall Street, we don't always manage our money rationally. Despite our best efforts, economic decisions can be influenced by emotion. Researchers offer a neurological explanation: The part of the brain that controls negative thinking can often override logical thought.

Alan Sanfey, Ph.D, and Jim Rilling, Ph.D, at Princeton University, had participants perform a decision-making experiment known as the "Ultimatum Game." In it, two strangers have a chance to split ten dollars. The "proposer" offers the "receiver" a portion of the money, then keeps the rest. If the receiver accepts the offer from the proposer, both keep their profits. If he rejects the offer, neither receives any money.

Rationally, the receiver should always accept—even if offered one dollar out of the ten—but this is not the case. People often forgo profit when they sense an unfair proposal. The study confirmed previous research that receivers will forgo profit to prevent proposers from getting a disproportionate amount of the reward.

Sanfey and Rilling monitored brain scans of 19 receivers during the experiment as they participated in 10 games with different proposers. While rejecting an offer, increased brain activity was observed in the anterior insula, which is associated with negative emotions such as disgust. Brain activity decreased in the dorsolateral prefrontal cortex, which is associated with deliberative thought. The reverse occurred when subjects accepted offers.

"People's emotions are so riled up that it overrides the happiness of getting one or two dollars," explains Sanfey. "People are willing to sacrifice this amount of money to punish the person who they think is treating them badly."

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