Neuroeconomics Flashcards
What are the features of expected utility theory?
> Access the desirability/utility of all potential outcomes
Weighs utilities by probability of occurance
Select course of action with greatest sum (expected utility)
What is narrow bracketing?
Simplifying decision by isolating them from a stream of decision in which they are embedded
What are the violations of expected utility theory?
> Narrow bracketing
Loss aversion
Misweighing probabilties
Disproportionate attention to best/worst outcomes
What is loss aversion?
People strongly prefer avoiding losses to acquiring gains
On what levels do people respond to risk?
> Cognitive
> Affective
What did Tom et al (2007) find?
> Activation in dorsal and ventral striatum
Activation in ventromedial prefrontal cortex
Activation increases as gains increase, decrease as losses increase
What did De Martino et al (2006) find?
> fMRI
Greater amygdala and anterior cingulate cortex activity when choosing:
-> Certain gains over risky gains
-> Certain losses over risky losses
What is intertemporal choice?
Decisions involving alternatives whose costs and benefits distribute over time
What is the discounted utility model?
> Dominant model of intertemporal choice in economics
> People exponentially discount the value of outcomes the more delayed they are
What did McClure et al (2004) find?
> Looked at delayed gratification intertemporal choices
Limbic system involved in immediate reward decisions
Lateral prefrontal cortex and posterios parietal cortex engaged regardless of decision
Increased fronto-parietal activity with delayed gratification
What is the ultimatum game?
> Two people, ‘proposer’ has ten pounds
Proposer offers part of money to responder
If responder says yes, they receive that much and the proposer receives the rest
If the responder says no neither of them get money
What does the ultimatum game demonstrate?
> Average offer exceeds 30% of total
> Offers less than 20% are frequently rejected
What are the explanations offered for the findings of the ultimatum game?
> Reciprocity based theories
> Inequality-aversion theories
What did Sanfey et al (2003) find?
> fMRI
Ultimatum game
People more willing to accept unfair offers from computers
Activation in the anterior insula in response to unfair human offers
Probability of rejection predicted by anterior insula activity
