Maximizing choice
Choosing the alternative with the highest value, reward or utility
Rewards
Proximate (approach) goals that, when acquired, enhance chances of survival and successful reproduction
Punishment
Proximate (avoidance) goal that, when avoided, serves to enhance the long-term chances of survival and successful reproduction
3 interconnected levels involved in reward
- Midbrain Ventral tegmental area (VTA)
- Dopamine production
- (ventral) striatum (NAcc)
- Expecting things from environment
- Preferences
- Ventromedial prefrontal cortex (vmPFC)
- Comparing different types of rewards
- Relative value
Ordinal Utility Theory
While the utility of a particular good and service cannot be measured using a numerical scale, different alternatives can be ordered into worse, equal or better
- Showing that value is computed in relative terms
Complete: Valuation is relative to… (4)
- The alternatives
- What you already have
- What others are getting
- Our beliefs about the value we’re getting
What did they wine study research?
- The hypothised that changes in the price of a product can influence neural computations associated with experienced pleasantness
- Participants were told that they were tasting five different wines, but it actually were only three
- Higher taste expectations lead to higher activity in the medial orbitofrontal cortex
Economic exchange
Decision to trade one good for another, based on a comparison of relative value
Where are experienced value and decision value represented?
- Experienced value»_space; anterior vmPFC
- Decision value»_space; posterior vmPFC
Name three types of costs that people make to get something valuable
- Risk
- (monetary) losses
- Effort
Risk (economist definition)
Variance of possible monetary outcomes
- Risk seeking: preference for a higher variance (but also high reward) payoff
Risk (psychologist definition)
The possibility of inflicting (monetary) harm to oneself or to others
- Risk seeking: preference for options that may result in harm or losses (but potentially high gain)
Problems with expected value (2)
- Model does not capture risk aversion
- Expected value maximization works only with low to moderate amounts of money (marginal value of money)
Weber’s law
Two stimuli must differ by a constant minimum percentage to be perceived as different (think of example of shouting in a noisy room vs. whispering in a quiet room)
What role does the insula play in regarding to risk
- perceiving risk
- increased activity»_space; decreased risk taking
- Aversive emotions such as fear, sadness, disgust or anxiety (these are implicated in risk processing)
What role does the ACC/DMPFC play in regarding to risk
- Acts against negative feelings of taking risk
- Earlier research: response conflict, error monitoring, decision making and overriding default responses
- Increased activity»_space; increased risk taking
Regret and losses
Both (regret even more than losses) activate the neural circuitry involved in processing pain and other negative feelings (insula and ACC)
How is expected value estimated?
Sum of the magnitudes multiplied by the probabilities of all possible outcomes (objective value is linear)
How is expected utility estimated?
Sum of the uitlities multiplied by the probabilities of all possible outcomes (subjective utility can curve)
Delay discounting
Valuing immediate rewards more than delayed
- Subjective value is discounted hyperbolic
Effort delay
Effort carries a cost, a reward may carry higher value if it is easily obtained than if it is obtained through great effort
Which 4 effects show reference dependence when making choices
- Reflection effect
- End-of-the-day effect
- Framing effect
- Endowment effect
Reflection effect
Preferences flip when changing the signs (gain vs loss)
- making you risk averse for gains and risk seeking for losses
End-of-the-day effect
Shift to long shots (higher risks) at the end of the day (end of betting session)»_space; trying to make up for losses
