Nonlinear neurobiological probability weighting functions for aversive outcomes

Abstract

While mainstream economic models assume that individuals treat probabilities objectively, many people tend to overestimate the likelihood of improbable events and underestimate the likelihood of probable events. However, a biological account for why probabilities would be treated this way does not yet exist. While undergoing fMRI, we presented individuals with a series of lotteries, defined by the voltage of an impending cutaneous electric shock and the probability with which the shock would be received. During the prospect phase, neural activity that tracked the probability of the expected outcome was observed in a circumscribed network of brain regions that included the anterior cingulate, visual, parietal, and temporal cortices. Most of these regions displayed responses to probabilities consistent with nonlinear probability weighting. The neural responses to passive lotteries predicted 79% of subsequent decisions when individuals were offered choices between different lotteries, and exceeded that predicted by behavior alone near the indifference point.

The Neurobiological Foundations of Valuation in Human Decision Making Under Uncertainty

“…The cost of computing values provides a normative rationale for why valuation may be done in the absence of free choice. Figure 1, adapted from (Berns, Capra et al 2007) provides strong evidence that valuation is performed even in imperative trials, and in a way that is relevant for free-choice trials. It shows how well a valuation model fit to neuronal activation during imperative trials can predict choice in free-choice trials.…”

“…Neural activation identified in imperative trials (the fMRI model) predicts choices better than actual choice in free-choice trials when the two available options are close in ranking. Source: (Berns, Capra et al 2007). Figure 3 Caption: Average firing rates of a cluster of caudate neurons in the monkey brain that encode the value of eye movements (saccades) in the preferred direction.…”

Three studies on the neuroeconomics of decision-making when payoffs are real and negative

“…The general framework and voltage setting procedure were similar to the experiment described in Section 2, except that the shocks were delivered probabilistically and all shocks occurred with the same delay. The study is reported in more detail in Berns et al (2007) and in Berns et al (2008).…”

“…The second study, presented in Section 3 and also reported in Berns et al, (2007Berns et al, ( , 2008, concerns probability weighting. This is the notion that individuals make decisions as if they transform probabilities by a function π(p), where p is the probability of an event.…”

“…In this chapter, we summarize three neuroeconomic studies previously reported in (Berns et al, 2006;Berns, Capra, Moore, & Noussair, 2007;Berns, Capra, Chappelow, Moore, & Noussair, 2008) and Chandresakhar, Capra, Moore, Noussair, and Berns (2008). There are two features that distinguish these three studies from most others in the experimental economic literature.…”