Topic 8: Decision Making Flashcards
problem of decision making
what to choose out of all the options available
importance of decision making
our choices define who we are and how we interact with the world
challenge of decision making
what are our options? what are the outcomes and how likely are they? what do we value?
Expected Value (EV)
- average outcome if a scenario is repeated many time
- calculated using probabilities and values of possible outcomes
how to calculate expected value
multiplying the probability of each outcome by its associated award ((% x $__)+ (% x $___))
advantages for using expected value (3)
- clear prescription for “correct” choices
- leads people, on average, to maximize monetary gains given what they know about the world
- keeps people decisions internally consistent
two problems with using expected value
- difficult to apply for non-monetary decisions
- doesn’t explain actual choices by actual people
Prospect Theory
- people do NOT make decisions based on expected values, probabilities, and absolute outcomes; they make them on subjective utility, decision weights, and relative outcomes
- quantitative decision making model saying that people make decisions based anticipated gains and loses from their current state, and that probabilities are subjective
utility
psychological value; usefulness or desirability of an outcome; total satisfaction
expected utility
the personal value placed on the potential outcome of a decision as weighted by the relative probability soft those outcomes; summarizing the utility under a given circumstance
rationality
consistency in decision making that is based on a conscious evaluation of the circumstance
reference dependence
a core assumption of prospect theory, such that outcomes are evaluated in terms of their relative change (+/-) from the current state
probability weighting
core assumption in prospect theory, such that the subjective probability of an outcome can differ systematically from the objective probability
behavioural economics
new social science discipline that combines elements of traditional economics and psychology to explain real-world decisions, including observed basis in choice
in a coin flip where you either win or lose the money, the expected utility will always be
0
the phenomenon where $0 and $1000 has a greater utility than $100 000 and $101 000
diminishing marginal utility
diminishing marginal utility has a ______ function
concave
rational thinking tends to be free of ______
cognitive limitations and whim
T/F: rational choice models accurately describe real-world decision making processes
false
prospect theory attempts to predict what people ____ (will/should) choice
will
two major differences between prospect theory and expected utility theory
1) prospect theory assumes reference dependence (comparisons to current state)
2) prospect theory proposes probability weighting (overestimate low-probabilty events and underestimate high-probabiltiy events)
people want to seek gains ____ than they want to avoid losses
less
diminishing marginal utility
subjective utility increases more slowly than object values, especially at large values
loss aversion
utility function is steeper for losses than gains
what happens when you change the way a question is asked to create a different point of reference
it leads to different valuations and thus difference choices
primary/unconditioned reinforcers
stimulus whose reward properties come from its salutary effects on homeostatic processes; food, water, warmth, and sex
secondary reinforcer
no direct effects on homeostatic processes but is still rewarding; money
negative reinforcement
withdrawal of desirable stimulus
punishment
delivery of an aversive stimulus
two common effects of insufficient dopamine systems
- difficulty controlling movements (Parkinsons and Huntington’s)
- linked to psychiatric disorders (schizophrenia, depression, and ADHD)
two important structures in the midbrain for dopamine neurons
- substantia nigra
- ventral tegmental area or VTA
substantia nigra’s importance
motor control through basal ganglia connections to striatum and thalamus
importance of ventral tegmental area (VTA)
- reward evaluation through uncles accumbens in basal ganglia, amygdala, hippocampus, and medial frontal lobe
- part of the midbrain with dopamine neurons for reward and learning
- motivation
nucleus accumbens
subdivision of the ventral striatum that contains neurons sensitive to dopamine and contribute to learning an reward evaluation
most drugs of abuse (except psychedelic compounds like LSD) use alterations in _______________ to exert addictive influences
function of dopamine neurons
what is the old idea about dopamine and rewards, and why is it not entirely true?
- Old idea: midbrain dopamine signals pleasure/reward
- dopamine signals motivations to pursue a reward/seeking, not it is not linked with ‘liking’ something
What gave Shultz, Dayan, and Montague the idea that learning was driven by rewards?
single unit recording form monkey’s midbrain dopamine neurons in VTA
Three conditions from Schultz et al’s study showing that learning is driven by rewards
1) before learning: monkey touches lever after appearance of light to receive drops of juice (dopamine neurons activated after the delivery of reward)
2) after several days of training: animal learns to reach for lever as soon as light is presented (primary reward doesn’t elicit dopamine response, the light does)
3) reward not delivered: if the monkey doesn’t receive reward at expected time; dopamine neurons increase firing for short period of time, so activity is lower than baseline
conclusions found my Shultz’s study
- activity of midbrain dopamine neurons is related to reward
- dopamine neurons don’t strictly report occurrence of reward
- dopamine neurons code deviations from predictions about time and magnitude of reward
reward prediction equation and the three outcomes
actual reward - expected reward
a) RPE > 0; better than expected
b) RPE = 0, as expected
c) RPE < 0; worse than expected
orbital frontal patients
- perform normally on IQ tests
- perform normally on cognitive control tests
- seem to make poor life decisions
damage to orbitofrontal cortex leads……
- impairments in learning the relationship between stimuli and rewards
- expected emotions aren’t generated, and overemphasized immediate reward over long term outcomes (temporal discounting)
