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Neuroeconomics

Civai C., Crescentini C., Rustichini A., Rumiati R.

Equality versus self-interest in the brain: Differential roles of anterior insula and

medial prefrontal cortex


NeuroImage, 62, 102-11


Everything else being the same, an equal outcome is generally preferred; however, an equitable allocation sometimes is possible only by sacrificing the total amount of resources available to society. Moreover, direct interests may interact with the perception of equality. Here, we have investigated individual preferences, and their neural basis, by employing a task in which an allocation of a fixed amount between the subject and another person (MS condition) or two third parties (TP condition) is randomly determined. The subject can accept or reject the outcome, in the same fashion as the Ultimatum Game: thus an unequal offer may be rejected at the cost of a loss in total amount. Behavioral results show preference for equal outcomes in TP and for equal and advantageous outcomes in MS. An activation of medial prefrontal cortex (mPFC), extending to the anterior middle cingulate cortex (aMCC), was found in MS unequal outcomes, particularly for disadvantageous outcomes and consequent rejections. The anterior insula (AI) was active for unequal outcomes, in both MS and TP. We propose that the equal treatment is a default social norm, and its violation is signaled by the AI, whereas aMCC/mPFC activation, negatively correlated to rejections, reflects the effort to overcome the default rule of equal treatment in favor of a self-advantageous efficiency.


Grygolec J., Coricelli G, Rustichini A.

Positive interaction of social comparison and personal responsibility for outcomes

Frontiers in  Psychology, 2012

We formulate and test a model that allows sharp separation between two different ways in which environment affects evaluation of outcomes, by comparing social vs. private and personal responsibility vs. chance. In the experiment, subjects chose between two lotteries, one low-risk and one high-risk. They could then observe the outcomes. By varying the environment between private (they could observe the outcome of the chosen lottery and the outcome of the lottery they had not chosen) and social (they could observe the outcome of the lottery chosen by another subject) we can differentiate the response and brain activity following the feedback in social and private settings. The evidence suggests that envy and pride are significant motives driving decisions and outcomes evaluation, stronger than private emotions like regret and rejoice, with ventral striatum playing a key role. When we focus on the outcome evaluation stage we demonstrate that BOLD signal in ventral striatum is increasing in the difference between obtained and counterfactual payoffs. For a given difference in payoffs, striatal responses are more pronounced in social than in private environment. Moreover, a positive interaction (complementarity) between social comparison and personal responsibility is reflected in the pattern of activity in the ventral striatum. At decision stage we observe getting ahead of the Joneses effect in ventral striatum with subjective value of risk larger in social than in private environment.


Causes of social reward differences encoded in human brain.

Vostroknutov A, Tobler PN, Rustichini A

J Neurophysiol 107: 1403–1412, 2012. 

First published December 7, 2011; doi:10.1152/jn.00298.2011.


Rewards may be due to skill, effort, and luck, and the social perception of inequality in rewards among individuals may depend on what

produced the inequality. Rewards due to skill produce a conflict: higher outcomes of others in this case are considered deserved, and

this counters incentives to reduce inequality. However, they also signal superior skill and for this reason induce strong negative affect

in those who perform less, which increases the incentive to reduce the inequality. The neurobiological mechanisms underlying evaluation of

rewards due to skill, effort, and luck are still unknown. We scanned brain activity of subjects as they perceived monetary rewards caused

by skill, effort, or luck. Subjects could subtract from others. Subtraction was larger, everything else being equal, in luck but increased

more as the difference in outcomes grew in skill. Similarly, reward related activation in medial orbitofrontal cortex was more sensitive to

the difference in relative outcomes in skill trials. Orbitofrontal activation reflecting comparative reward advantage predicted by how

much subjects reduced unfavorable reward inequality later on in the trial. Thus medial orbitofrontal cortex activity reflects the causes of

reward and predicts actions that reduce inequality.



Medial prefrontal cortex and striatum mediate the influence of social comparison on the decision process


    Abstract: We compared private and social decision making to investigate the neural underpinnings of the effect of social comparison on risky

choices. We measured brain activity using functional MRI while participants chose between two lotteries: in the private condition,

they observed the outcome of the unchosen lottery, and in the social condition, the outcome of the lottery chosen by another

person. The striatum, a reward-related brain structure, showed higher activity when participants won more than their counterpart

(social gains) compared with winning in isolation and lower activity when they won less than their counterpart (social loss)

compared with private loss. The medial prefrontal cortex, implicated in social reasoning, was more activated by social gains than

all other events. Sensitivity to social gains influenced both brain activity and behavior during subsequent choices. Specifically,

striatal activity associated with social gains predicted medial pre-frontal cortex activity during social choices, and experienced

social gains induced more risky and competitive behavior in later trials. These results show that interplay between reward and

social reasoning networks mediates the influence of social comparison on the decision process.


The neural representation of subjective value under risk and ambiguity

Published Version

        Abstract: Risk and ambiguity are two conditions in which the consequences of possible outcomes are not certain. Under risk the probabilities of different outcomes can be estimated, while under ambiguity even these probabilities are not known. Although most people exhibit at least some aversion to both risk and ambiguity, the degree of these aversions is largely uncorrelated across subjects, suggesting that risk aversion and ambiguity aversion are distinct phenomena. Previous studies have shown differences in brain activations for risky and ambiguous choices, and have identified neural mechanisms that may mediate transitions from conditions of ambiguity to conditions of risk. Unknown, however, is whether the value of risky and ambiguous options is necessarily represented by two distinct systems or whether a common mechanism can be identified. 
        To answer this question we compared the neural representation of subjective value under risk and ambiguity. fMRI was used to track brain activation while subjects made choices regarding options that varied systematically in the amount of money offered  and in either the probability of obtaining that amount or the level of ambiguity around that probability.  A common system, consisting of at least the striatum and the medial prefrontal cortex, was found to represent subjective value under both conditions.
 

        Abstract: We develop a neuronal theory of the choice process (NTCP), which takes a subject from the moment  in which  two  options are presented to the selection of one of the two.  The theory is based on an optimal signal detection, which generalizes the signal detection theory by adding the choice of effort as optimal choice for a given informational value of the signal for
every effort level and a cost of effort.
        NTCP predicts the choice made as a stochastic choice: that is, as a probability distribution over two options in a set, the level of effort provided, the error rate and the time to respond.  It provides a unified account of behavioral evidence (choices made, error rate, time to respond) as well as neural evidence (represented by the effort rate measured for example by the level of brain activation). It also provides a unified explanation of several facts discovered and interpreted in the last decades of experimental economic analysis of choices, which we review.

 

Reward-based emotions: affective evaluation of outcomes and regret learning

        Abstract: This chapter concerns the behavioral effects and the neural substrates of a class of reward-based emotions, which are emotions elicited by rewards and punishers. We describe how outcome evaluation is influenced by the level of responsibility in the process of choice (agency) and by the available information regarding alternative outcomes. The data we report suggest that cognitive context, exemplified by counterfactual thinking (what might have been if a different state of the world had realized) exerts a modulatory influence on the orbitofrontal cortex activation to rewards and punishers.

        The orbitofrontal cortex is also critically involved in learning in environments where the information about the rewards of the alternative foregone actions is available. These processes are addressed in humans, both in the context of normal and altered brain functions.

 

Second to fourth digit ratio predicts success among high-frequency financial traders

        Abstract: Pre-natal androgens have important organising effects on brain development and future behaviour. The 2nd to 4th digit length ratio (2D:4D) has been proposed as marker of these pre-natal androgen effects, a relatively longer 4th finger indicating higher pre-natal androgen exposure. 2D:4D has been shown to predict success in highly competitive sports. Yet little is known about the effects of pre-natal androgens on an economically influential class of competitive risk taking – trading in the financial world. Here we report the findings of a study conducted in the City of London in which we sampled 2D:4D from a group of male traders engaged in what is variously called ‘noise’ or ‘high-frequency’ trading.

        We found that 2D:4D predicted the traders’ long term profitability as well as the number of years they remained in the business. 2D:4D also predicted the sensitivity of their profitability to increases both in circulating testosterone and in market volatility. Our results suggest that pre-natal androgens increase risk preferences and promote more rapid visuo-motor scanning and physical reflexes. The success and longevity of traders exposed to high levels of pre-natal androgens further suggests that financial markets may select for biological traits rather than rational expectations.

 

Counterfactual Thinking and Emotions: Regret and Envy Learning

         Abstract: Emotions like regret and envy share a common origin: they are motivated by the counterfactual thinking of what would have happened had we made a different choice. When we contemplate the outcome of a choice we made, we may use the information on the outcome of a choice we did not make. Regret is the purely private comparison between two choices that we could have taken: envy adds to this the information on outcome of choices of others. However, envy has a distinct social component, in that it adds the change in the social ranking that follows a difference in the outcomes. We study the theoretical foundation and the experimental test of this view.

 

Interdependent utilities: How social ranking affects choice behavior

         Abstract: Organization in hierarchical dominance structures is prevalent in animal societies, so a strong preference for higher positions in social ranking is likely to be an important motivation of human social and economic behavior. This preference is also likely to influence the way in which we evaluate our outcome and the outcome of others, and finally the way we choose. In our experiment participants choose among lotteries with different levels of risk, and can observe the choice that others have made. Results show that the relative weight of gains and losses is the opposite in the private and social domain. For private outcomes, experience and anticipation of losses loom larger than gains, whereas in the social domain, gains loom larger than losses, as indexed by subjective emotional evaluations and physiological responses. We propose a theoretical model (interdependent utilities), predicting the implication of this effect for choice behavior. The relatively larger weight assigned to social gains strongly affects choices, inducing complementary behavior: faced with a weaker competitor, participants adopt a more risky and dominant behavior.

   

Dual or Unitary System? Two Alternative Models of Decision-Making

       Abstract: In recent years, a lively debate in Neuroeconomics has focused on what appears to be a fundamental question: is the brain a unitary system, or a dual system? We are still far from a consensus view. Evidence is accumulating supporting both sides of the debate. A reason for the difficulty in reaching a convincing solution is that we do not yet have a clear theoretical model for either position. Here we review the basic elements and potential building blocks for such theories. Our sources are in large measure from classical decision theory and game theory.

  

Neuroeconomics: What have we found, and what should we search for

       Abstract: Neuroeconomics is an interdisciplinary field which is less than twenty years old. Its original program was to provide a test for a large number of competitive theories of decision making. It has in part realized this program, and we review the main findings here. But its results are also posing the need for a new theoretical unifying framework. We outline the main conclusions, and a possible line of future research.

 

 

 
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