Neuronal substrates for choice under ambiguity, risk, gains, and losses

Economic forces shape the behavior of individuals and institutions. Forces affecting individual behavior are attitudes about payoffs (gains and losses) and beliefs about outcomes (risk and ambiguity). Under risk, the likelihoods of alternative outcomes are fully known. Under ambiguity, these likelihoods are unknown. In our experiment, payoffs and outcomes were manipulated independently during a classical choice task as brain activity was measured with positron emission tomography (PET). Here, we show that attitudes about payoffs and beliefs about the likelihood of outcomes exhibit interaction effects both behaviorally and neurally. Participants are risk averse in gains and risk-seeking in losses; they are ambiguity-seeking in neither gains nor losses. Two neural substrates for choice surfaced in the interaction between attitudes and beliefs: a dorsomedial neocortical system and a ventromedial system. This finding reveals that the brain does not honor a prevalent assumption of economics--the independence of th e evaluations of payoffs and outcomes. The demonstration of a relationship between brain activity and observed economic choice attests to the feasibility of a neuroeconomic decision science.
Introduction A gamble with known payoffs with a well-defined probability distribution is termed 'risky' (Ellsberg 1961, Knight 1921). In contrast, a gamble with known payoffs with probabilities that are not [...]