Why do people reject mixed gambles?

Decision makers often reject mixed gambles offering equalprobabilities of a larger gain and a smaller loss. This importantbehavioral pattern is generally seen as evidence for lossaversion, a psychological mechanism according to whichlosses are given higher utility weights than gains. In this paperwe consider an alternate mechanism capable of generatinghigh rejection rates: A predecisional bias towards rejectionwithout the calculation of utility. We use a drift diffusionmodel of decision making to simultaneously specify and testfor the effects of these two psychological mechanisms in agambling task. Our results indicate that high rejection rates formixed gambles result from multiple different psychologicalmechanisms, and that a predecisional bias applied prior to thecomputation of utility (rather than loss aversion) is the primarydeterminant of this important behavioral tendency

The behavioral and neural basis of foreign language effect on risk-taking

Recent studies show that people exhibit a reduced decision bias in a foreign language relative to their native language. However, the underlying mechanism remains unknown. Using functional magnetic resonance imaging (fMRI) combined with an even-probability gambling task in which gambling feedback was presented in either a native language or a foreign language after each decision, we assessed the neural correlates of language modulated behavioral changes in decision making. In both foreign and native language contexts, participants showed a behavioral pattern resembles the Gambler's fallacy that losing a gamble leads to more betting than winning a gamble. While there was no language difference in gambling, bilateral caudate and amygdala gain signals were exaggerated by foreign language in relative to native language, suggesting that foreign language enhanced neural responses to rewards. Moreover, the individual difference in foreign language-induced Gambler's fallacy-like decision bias was associated with activation in the right amygdala and ventromedial prefrontal cortex, as well as functional connectivity between right amygdala and right putamen/right posterior insula. Our results confirm that outcome processing in emotion-related regions may underlie individual differences in foreign language effects in judgment and decision making

Winning and losing: Effects on impulsive action

In the present study, we examined the effect of wins and losses on impulsive action in gambling (Experiments 1-3) and non-gambling tasks (Experiments 4-5). In each experiment, subjects performed a simple task in which they had to win points. On each trial, they had to choose between a gamble and a non-gamble. The gamble was always associated with a higher amount but a lower probability of winning than the non-gamble. After subjects indicated their choice (i.e. gamble or not), feedback was presented. They had to press a key to start the next trial. Experiments 1-3 showed that, compared to the non-gambling baseline, subjects were faster to initiate the next trial after a gambled loss, indicating that losses can induce impulsive actions. In Experiments 4 and 5, subjects alternated between the gambling task and a neutral decision-making task in which they could not win or lose points. Subjects were faster in the neutral decision-making task if they had just lost in the gambling task, suggesting that losses have a general effect on action. Our results challenge the dominant idea that humans become more cautious after suboptimal outcomes. Instead, they indicate that losses in the context of potential rewards are emotional events that increase impulsivity.This work was supported by an Economic and Social Research Council Grant (ES/J00815X/1) to FV, CDC & IPLM, a starting grant to FV from the European Research Council (ERC) under the European Union's Seventh Framework Programme (FP7/2007-2013)/ ERC Grant Agreement No. 312445, and a Biotechnology and Biological Sciences Research Council Grant (BB/K008277/1) to CDC and FV

Neural mechanisms underlying context-dependent shifts in risk preferences

Studies of risky decision-making have demonstrated that humans typically prefer risky options after incurring a financial loss, while generally preferring safer options after a monetary gain. Here, we examined the neural processes underlying these inconsistent risk preferences by investigating the evaluation of gains and losses, and demonstrating how these responses can impact subsequent preference for either risky or safe choice options. Participants performed a task while undergoing fMRI in which they experienced both gains and losses. Immediately following a gain or loss, participants decided to either play or pass on a "double-or-quits" gamble. The outcome of the gamble could either double or eliminate their initial gain (from the time-estimation task) or redeem or double their initial loss. If they chose not to play this gamble, they retained the initial gain or loss. We demonstrate a shift in risk-taking preferences for identical sets of gambles as a function of previous gains or losses, with participants showing a greater preference towards riskier decisions in the context of a prior loss. An interaction between evaluating gain/loss contexts and subsequent behavioral risk pattern revealed an increased BOLD response in the ventromedial prefrontal cortex (vmPFC), with stronger responses for both gambling in a loss context and safety in a gain context. This suggests that the vmPFC is responsible for integrating these contextual effects, with these processes impacting on subsequent risky choice

Primate anterior insular cortex represents economic decision variables postulated by Prospect theory

Humans and animals need to make decisions under various degrees of uncertainty. These decisions are strongly influenced by an individual's risk attitude. Substantial studies have demonstrated that one’s risk attitude can vary substantially across different behavioral contexts. For instance, humans and animals show different risk attitudes when facing risky gains versus risky losses. The abundance of resources in the environment and the current wealth of subjects also modulate an individual's risk attitude. Prospect theory, the most successful and wide-ranging descriptive model of decision-making under risk, explains these behavioral effects using the concepts of a reference point and loss aversion. However, at present, prospect theory cannot be clearly interpreted in terms of neuronal mechanisms. None of the known structures or processes involved in decision-making in the primate brain has been convincingly related to the two key concepts: reference point dependence and loss aversion. Based on human imaging and lesion studies, we hypothesized that the anterior insular cortex (AIC) may be the candidate that represents the current state of the subject (the reference point) as well as reference-dependent value signals that differ in loss or gain context (asymmetrical value functions in loss and gain) suggested by prospect theory. Using a new token gambling task, we found that macaques, like humans, change their risk attitude across wealth levels and gain/loss contexts. In addition, monkeys’ risk behaviors were well explained with a wealth-dependent prospect theory model. Furthermore, neurons in the primate AIC monitor contextual factor that influence monkey’s risk attitudes. Many AIC neurons encoding the wealth level of the monkey as well as the expected value of options in a gain/loss specific manner. A subset of AIC neurons can further predict inter-trial fluctuations of the monkey’s risk attitude. These findings suggest a role of the primate AIC in representing economic gain and loss relative to a reference point and in influencing the likelihood of accepting a risk during uncertain decisions. We anticipate our finding to be a starting point for thoughtful investigation of neural implementation of core components in the prospect theory