Behaviorally informed policies for household financial decisionmaking

This is the final version of the article. Available from the publisher via the DOI in this record.Low incomes, limited financial literacy, fraud, and deception are just a few of the many intractable economic and social factors that contribute to the financial difficulties that households face today. Addressing these issues directly is difficult and costly. But poor financial outcomes also result from systematic psychological tendencies, including imperfect optimization, biased judgments and preferences, and susceptibility to influence by the actions and opinions of others. Some of these psychological tendencies and the problems they cause may be countered by policies and interventions that are both low cost and scalable. We detail the ways that these behavioral factors contribute to consumers' financial mistakes and suggest a set of interventions that the federal government, in its dual roles as regulator and employer, could feasibly test or implement to improve household financial outcomes in a variety of domains: retirement, short-term savings, debt management, the take-up of government benefits, and tax optimization

Risk, Unexpected Uncertainty, and Estimation Uncertainty: Bayesian Learning in Unstable Settings

Recently, evidence has emerged that humans approach learning using Bayesian updating rather than (model-free) reinforcement algorithms in a six-arm restless bandit problem. Here, we investigate what this implies for human appreciation of uncertainty. In our task, a Bayesian learner distinguishes three equally salient levels of uncertainty. First, the Bayesian perceives irreducible uncertainty or risk: even knowing the payoff probabilities of a given arm, the outcome remains uncertain. Second, there is (parameter) estimation uncertainty or ambiguity: payoff probabilities are unknown and need to be estimated. Third, the outcome probabilities of the arms change: the sudden jumps are referred to as unexpected uncertainty. We document how the three levels of uncertainty evolved during the course of our experiment and how it affected the learning rate. We then zoom in on estimation uncertainty, which has been suggested to be a driving force in exploration, in spite of evidence of widespread aversion to ambiguity. Our data corroborate the latter. We discuss neural evidence that foreshadowed the ability of humans to distinguish between the three levels of uncertainty. Finally, we investigate the boundaries of human capacity to implement Bayesian learning. We repeat the experiment with different instructions, reflecting varying levels of structural uncertainty. Under this fourth notion of uncertainty, choices were no better explained by Bayesian updating than by (model-free) reinforcement learning. Exit questionnaires revealed that participants remained unaware of the presence of unexpected uncertainty and failed to acquire the right model with which to implement Bayesian updating

Reduced haemodynamic response in the ageing visual cortex measured by absolute fNIRS

The effect of healthy ageing on visual cortical activation is still to be fully explored. This study aimed to elucidate whether the haemodynamic response (HDR) of the visual cortex altered as a result of ageing. Visually normal (healthy) participants were presented with a simple visual stimulus (reversing checkerboard). Full optometric screening was implemented to identify two age groups: younger adults (n = 12, mean age 21) and older adults (n = 13, mean age 71). Frequency-domain Multi-distance (FD-MD) functional Near-Infrared Spectroscopy (fNIRS) was used to measure absolute changes in oxygenated [HbO] and deoxygenated [HbR] haemoglobin concentrations in the occipital cortices. Utilising a slow event-related design, subjects viewed a full field reversing checkerboard with contrast and check size manipulations (15 and 30 minutes of arc, 50% and 100% contrast). Both groups showed the characteristic response of increased [HbO] and decreased [HbR] during stimulus presentation. However, older adults produced a more varied HDR and often had comparable levels of [HbO] and [HbR] during both stimulus presentation and baseline resting state. Younger adults had significantly greater concentrations of both [HbO] and [HbR] in every investigation regardless of the type of stimulus displayed (p<0.05). The average variance associated with this age-related effect for [HbO] was 88% and [HbR] 91%. Passive viewing of a visual stimulus, without any cognitive input, showed a marked age-related decline in the cortical HDR. Moreover, regardless of stimulus parameters such as check size, the HDR was characterised by age. In concurrence with present neuroimaging literature, we conclude that the visual HDR decreases as healthy ageing proceeds

Under pressure: Response urgency modulates striatal and insula activity during decision-making under risk

When deciding whether to bet in situations that involve potential monetary loss or gain (mixed gambles), a subjective sense of pressure can influence the evaluation of the expected utility associated with each choice option. Here, we explored how gambling decisions, their psychophysiological and neural counterparts are modulated by an induced sense of urgency to respond. Urgency influenced decision times and evoked heart rate responses, interacting with the expected value of each gamble. Using functional MRI, we observed that this interaction was associated with changes in the activity of the striatum, a critical region for both reward and choice selection, and within the insula, a region implicated as the substrate of affective feelings arising from interoceptive signals which influence motivational behavior. Our findings bridge current psychophysiological and neurobiological models of value representation and action-programming, identifying the striatum and insular cortex as the key substrates of decision-making under risk and urgency

Brain mapping in cognitive disorders: a multidisciplinary approach to learning the tools and applications of functional neuroimaging

<p>Abstract</p> <p>Background</p> <p>With rapid advances in functional imaging methods, human studies that feature functional neuroimaging techniques are increasing exponentially and have opened a vast arena of new possibilities for understanding brain function and improving the care of patients with cognitive disorders in the clinical setting. There is a growing need for medical centers to offer clinically relevant functional neuroimaging courses that emphasize the multifaceted and multidisciplinary nature of this field. In this paper, we describe the implementation of a functional neuroimaging course focusing on cognitive disorders that might serve as a model for other medical centers. We identify key components of an active learning course design that impact student learning gains in methods and issues pertaining to functional neuroimaging that deserve consideration when optimizing the medical neuroimaging curriculum.</p> <p>Methods</p> <p>Learning gains associated with the course were assessed using polychoric correlation analysis of responses to the SALG (Student Assessment of Learning Gains) instrument.</p> <p>Results</p> <p>Student gains in the functional neuroimaging of cognition as assessed by the SALG instrument were strongly associated with several aspects of the course design.</p> <p>Conclusion</p> <p>Our implementation of a multidisciplinary and active learning functional neuroimaging course produced positive learning outcomes. Inquiry-based learning activities and an online learning environment contributed positively to reported gains. This functional neuroimaging course design may serve as a useful model for other medical centers.</p

Temporal dynamics of selective attention and conflict resolution during cross-dimensional go-nogo decisions

<p>Abstract</p> <p>Background</p> <p>Decision-making is a fundamental capacity which is crucial to many higher-order psychological functions. We recorded event-related potentials (ERPs) during a visual target-identification task that required go-nogo choices. Targets were identified on the basis of cross-dimensional conjunctions of particular colors and forms. Color discriminability was manipulated in three conditions to determine the effects of color distinctiveness on component processes of decision-making.</p> <p>Results</p> <p>Target identification was accompanied by the emergence of prefrontal P2a and P3b. Selection negativity (SN) revealed that target-compatible features captured attention more than target-incompatible features, suggesting that intra-dimensional attentional capture was goal-contingent. No changes of cross-dimensional selection priorities were measurable when color discriminability was altered. Peak latencies of the color-related SN provided a chronometric measure of the duration of attention-related neural processing. ERPs recorded over the frontocentral scalp (N2c, P3a) revealed that color-overlap distractors, more than form-overlap distractors, required additional late selection. The need for additional response selection induced by color-overlap distractors was severely reduced when color discriminability decreased.</p> <p>Conclusion</p> <p>We propose a simple model of cross-dimensional perceptual decision-making. The temporal synchrony of separate color-related and form-related choices determines whether or not distractor processing includes post-perceptual stages. ERP measures contribute to a comprehensive explanation of the temporal dynamics of component processes of perceptual decision-making.</p

Expert Financial Advice Neurobiologically “Offloads” Financial Decision-Making under Risk

BACKGROUND: Financial advice from experts is commonly sought during times of uncertainty. While the field of neuroeconomics has made considerable progress in understanding the neurobiological basis of risky decision-making, the neural mechanisms through which external information, such as advice, is integrated during decision-making are poorly understood. In the current experiment, we investigated the neurobiological basis of the influence of expert advice on financial decisions under risk. METHODOLOGY/PRINCIPAL FINDINGS: While undergoing fMRI scanning, participants made a series of financial choices between a certain payment and a lottery. Choices were made in two conditions: 1) advice from a financial expert about which choice to make was displayed (MES condition); and 2) no advice was displayed (NOM condition). Behavioral results showed a significant effect of expert advice. Specifically, probability weighting functions changed in the direction of the expert's advice. This was paralleled by neural activation patterns. Brain activations showing significant correlations with valuation (parametric modulation by value of lottery/sure win) were obtained in the absence of the expert's advice (NOM) in intraparietal sulcus, posterior cingulate cortex, cuneus, precuneus, inferior frontal gyrus and middle temporal gyrus. Notably, no significant correlations with value were obtained in the presence of advice (MES). These findings were corroborated by region of interest analyses. Neural equivalents of probability weighting functions showed significant flattening in the MES compared to the NOM condition in regions associated with probability weighting, including anterior cingulate cortex, dorsolateral PFC, thalamus, medial occipital gyrus and anterior insula. Finally, during the MES condition, significant activations in temporoparietal junction and medial PFC were obtained. CONCLUSIONS/SIGNIFICANCE: These results support the hypothesis that one effect of expert advice is to "offload" the calculation of value of decision options from the individual's brain

Of Black Swans and Tossed Coins: Is the Description-Experience Gap in Risky Choice Limited to Rare Events?

When faced with risky decisions, people tend to be risk averse for gains and risk seeking for losses (the reflection effect). Studies examining this risk-sensitive decision making, however, typically ask people directly what they would do in hypothetical choice scenarios. A recent flurry of studies has shown that when these risky decisions include rare outcomes, people make different choices for explicitly described probabilities than for experienced probabilistic outcomes. Specifically, rare outcomes are overweighted when described and underweighted when experienced. In two experiments, we examined risk-sensitive decision making when the risky option had two equally probable (50%) outcomes. For experience-based decisions, there was a reversal of the reflection effect with greater risk seeking for gains than for losses, as compared to description-based decisions. This fundamental difference in experienced and described choices cannot be explained by the weighting of rare events and suggests a separate subjective utility curve for experience

Impact of Visual Repetition Rate on Intrinsic Properties of Low Frequency Fluctuations in the Visual Network

BACKGROUND: Visual processing network is one of the functional networks which have been reliably identified to consistently exist in human resting brains. In our work, we focused on this network and investigated the intrinsic properties of low frequency (0.01-0.08 Hz) fluctuations (LFFs) during changes of visual stimuli. There were two main questions to be discussed in this study: intrinsic properties of LFFs regarding (1) interactions between visual stimuli and resting-state; (2) impact of repetition rate of visual stimuli. METHODOLOGY/PRINCIPAL FINDINGS: We analyzed scanning sessions that contained rest and visual stimuli in various repetition rates with a novel method. The method included three numerical approaches involving ICA (Independent Component Analyses), fALFF (fractional Amplitude of Low Frequency Fluctuation), and Coherence, to respectively investigate the modulations of visual network pattern, low frequency fluctuation power, and interregional functional connectivity during changes of visual stimuli. We discovered when resting-state was replaced by visual stimuli, more areas were involved in visual processing, and both stronger low frequency fluctuations and higher interregional functional connectivity occurred in visual network. With changes of visual repetition rate, the number of areas which were involved in visual processing, low frequency fluctuation power, and interregional functional connectivity in this network were also modulated. CONCLUSIONS/SIGNIFICANCE: To combine the results of prior literatures and our discoveries, intrinsic properties of LFFs in visual network are altered not only by modulations of endogenous factors (eye-open or eye-closed condition; alcohol administration) and disordered behaviors (early blind), but also exogenous sensory stimuli (visual stimuli with various repetition rates). It demonstrates that the intrinsic properties of LFFs are valuable to represent physiological states of human brains

Dissociation between the Activity of the Right Middle Frontal Gyrus and the Middle Temporal Gyrus in Processing Semantic Priming

The aim of this event-related functional magnetic resonance imaging (fMRI) study was to test whether the right middle frontal gyrus (MFG) and middle temporal gyrus (MTG) would show differential sensitivity to the effect of prime-target association strength on repetition priming. In the experimental condition (RP), the target occurred after repetitive presentation of the prime within an oddball design. In the control condition (CTR), the target followed a single presentation of the prime with equal probability of the target as in RP. To manipulate semantic overlap between the prime and the target both conditions (RP and CTR) employed either the onomatopoeia “oink” as the prime and the referent “pig” as the target (OP) or vice-versa (PO) since semantic overlap was previously shown to be greater in OP. The results showed that the left MTG was sensitive to release of adaptation while both the right MTG and MFG were sensitive to sequence regularity extraction and its verification. However, dissociated activity between OP and PO was revealed in RP only in the right MFG. Specifically, target “pig” (OP) and the physically equivalent target in CTR elicited comparable deactivations whereas target “oink” (PO) elicited less inhibited response in RP than in CTR. This interaction in the right MFG was explained by integrating these effects into a competition model between perceptual and conceptual effects in priming processing