From behavioural economics to neuroeconomics to decision neuroscience: the ascent of biology in research on human decision making

Here, we briefly review the evolution of research on human decision-making over the past few decades. We discern a trend whereby biology moves from subserving economics (neuroeconomics), to providing the data that advance our knowledge of the nature of human decision-making (decision neuroscience). Examples illustrate that the integration of behavioural and biological models is fruitful especially for understanding heterogeneity of choice in humans

The anticipation and outcome phases of reward and loss processing: A neuroimaging meta-analysis of the monetary incentive delay task

The processing of rewards and losses are crucial to everyday functioning. Considerable interest has been attached to investigating the anticipation and outcome phases of reward and loss processing, but results to date have been inconsistent. It is unclear if anticipation and outcome of a reward or loss recruit similar or distinct brain regions. In particular, while the striatum has widely been found to be active when anticipating a reward, whether it activates in response to the anticipation of losses as well remains ambiguous. Furthermore, concerning the orbitofrontal/ventromedial prefrontal regions, activation is often observed during reward receipt. However, it is unclear if this area is active during reward anticipation as well. We ran an Activation Likelihood Estimation meta‐analysis of 50 fMRI studies, which used the Monetary Incentive Delay Task (MIDT), to identify which brain regions are implicated in the anticipation of rewards, anticipation of losses, and the receipt of reward. Anticipating rewards and losses recruits overlapping areas including the striatum, insula, amygdala and thalamus, suggesting that a generalised neural system initiates motivational processes independent of valence. The orbitofrontal/ventromedial prefrontal regions were recruited only during the reward outcome, likely representing the value of the reward received. Our findings help to clarify the neural substrates of the different phases of reward and loss processing, and advance neurobiological models of these processes

Led into Temptation? Rewarding Brand Logos Bias the Neural Encoding of Incidental Economic Decisions

Human decision-making is driven by subjective values assigned to alternative choice options. These valuations are based on reward cues. It is unknown, however, whether complex reward cues, such as brand logos, may bias the neural encoding of subjective value in unrelated decisions. In this functional magnetic resonance imaging (fMRI) study, we subliminally presented brand logos preceding intertemporal choices. We demonstrated that priming biased participants' preferences towards more immediate rewards in the subsequent temporal discounting task. This was associated with modulations of the neural encoding of subjective values of choice options in a network of brain regions, including but not restricted to medial prefrontal cortex. Our findings demonstrate the general susceptibility of the human decision making system to apparently incidental contextual information. We conclude that the brain incorporates seemingly unrelated value information that modifies decision making outside the decision-maker's awareness

The Price of Protection: Derivatives, Default Risk, and Margining

By attaching collateral to a derivatives contract, margining supposedly reduces default risk. In this paper, we rst develop a set of testable hypotheses about the eects of margining on banks' welfare, trading volume, and default risk in the context of a stylized banking sector equilibrium model. Subsequently, we test these hypotheses with a market simulation model. Capturing some of the main characteristics of derivatives markets, we identify stress situations in which margining has an ambiguous impact on banks' welfare, increases banks' default risk while reducing their aggregate trading volume. This is the case, in particular, when margin rates are high and collateral is scarce.Derivative Securities, Default Risk, Collateral, Margining, Systemic Risk.

Margining in derivatives markets and the stability of the banking sector

We investigate the effects of margining, a widely-used mechanism for attaching collateral to derivatives contracts, on derivatives trading volume, default risk, and on the welfare in the banking sector. First, we develop a stylized banking sector equilibrium model to develop some basic intuition of the effects of margining. We find that a margin requirement can be privately and socially sub-optimal. Subsequently, we extend this model into a dynamic simulation model that captures some of the essential characteristics of over-the-counter derivatives markets. Contrarily to the common belief that margining always reduces default risk, we find that there exist situations in which margining increases default risk, reduces aggregate derivatives' trading volume, and has an ambiguous effect on welfare in the banking sector. The negative effects of margining are exacerbated during periods of market stress when margin rates are high and collateral is scarce. We also find that central counterparties only lift some of the inefficiencies caused by margining

Data

This file contains the raw data for all analyses involved in the study. Variable names should be self-identifying, and all analyses from the study should be reproducible. Please contact Bowen J Fung ([email protected]) if you require clarification or more information

Data from: High monetary reward rates and caloric rewards decrease temporal persistence

Temporal persistence refers to an individual's capacity to wait for future rewards, while forgoing possible alternatives. This requires a trade-off between the potential value of delayed rewards and opportunity costs, and is relevant to many real-world decisions, such as dieting. Theoretical models have previously suggested that high monetary reward rates, or positive energy balance, may result in decreased temporal persistence. In our study, 50 fasted participants engaged in a temporal persistence task, incentivised with monetary rewards. In alternating blocks of this task, rewards were delivered at delays drawn randomly from distributions with either a lower or higher maximum reward rate. During some blocks participants received either a caloric drink or water. We used survival analysis to estimate participants' probability of quitting conditional on the delay distribution and the consumed liquid. Participants had a higher probability of quitting in blocks with the higher reward rate. Furthermore, participants who consumed the caloric drink had a higher probability of quitting than those who consumed water. Our results support the predictions from the theoretical models, and importantly, suggest that both higher monetary reward rates and physiologically relevant rewards can decrease temporal persistence, which is a crucial determinant for survival in many species

Caloric Primary Rewards Systematically Alter Time Perception

Human time perception can be influenced by contextual factors, such as the presence of reward. Yet, the exact nature of the relationship between time perception and reward has not been conclusively characterized. We implemented a novel experimental paradigm to measure estimations of time across a range of suprasecond intervals, during the anticipation and after the consumption of fruit juice, a physiologically relevant primary reward. We show that average time estimations were systematically affected by the consumption of reward, but not by the anticipation of reward. Compared with baseline estimations of time, reward consumption was associated with subsequent overproductions of time, and this effect increased for larger magnitudes of reward. Additional experiments demonstrated that the effect of consumption did not extend to a secondary reward (money), a tasteless, noncaloric primary reward (water), or a sweet, noncaloric reward (aspartame). However, a tasteless caloric reward (maltodexrin) did induce overproductions of time, although this effect did not scale with reward magnitude. These results suggest that the consumption of caloric primary rewards can alter time perception, which may be a psychophysiological mechanism by which organisms regulate homeostatic balance