Diminished Risk-Aversion After Right DLPFC Stimulation: Effects of rTMS on a Risky Ball Throwing Task

OBJECTIVES

Several studies on human risk taking and risk aversion have reported the involvement of the dorsolateral prefrontal cortex (DLPFC). Yet, current knowledge of the neural mechanisms of risk-related decision making is not conclusive, mainly relying on studies using non-motor tasks. Here we examine how modulation of DLPFC activity by repetitive transcranial magnetic stimulation (rTMS) affects risk-taking behavior during a motor response task.

METHODS

One-Hertz rTMS to the right DLPFC was applied to monitor risk-taking and risk-aversion performance during a goal-directed risky task with motor response. Healthy participants were instructed to aim for a high score by throwing a ball as close to the ceiling as possible, while avoiding touching the ceiling with the ball.

RESULTS

One-Hertz rTMS stimulation to the right DLPFC significantly increased the frequency of ceiling hits, compared to Sham-stimulation.

CONCLUSIONS

Our results suggest that the right DLPFC is a valid target for manipulating risky behavior in tasks with a motor-response. Following rTMS stimulation participants' preference shifts toward immediate awards, while becoming significantly less sensitive to potential negative consequences. The results confirm that the right DLPFC is involved in impulse control in goal-directed executive tasks. (JINS, 2019, 25, 72-78).

Decision-making, financial risk aversion, and behavioral biases: The role of testosterone and stress

We examine the relation between testosterone, cortisol, and financial decisions in a sample of naïve investors. We find that testosterone level is positively related to excess risk-taking, whereas cortisol level is negatively related to excess risk-taking (correlation coefficient [r]: 0.75 and -0.21, respectively). Additionally, we find support for the dual-hormone hypothesis in a financial context. Specifically, the testosterone-to-cortisol ratio is significantly related to loss aversion. Individuals with a higher ratio are 3.4 times more likely to sell losing stocks (standard error [SE]: 1.63). Furthermore, we find a positive feedback loop between financial success, testosterone, and cortisol. Specifically, financial success is significantly related to higher post-trial testosterone and cortisol by a factor of 0.53 (SE: 0.14). Finally, we find that in a competitive environment, testosterone level increases significantly, leading to greater risk-taking than in noncompetitive environment. Overall, this study underscores the importance of the endocrine system on financial decision-making. The results of this study are relevant to a broad audience, including investors looking to optimize financial performance, industry human resources, market regulators, and researchers.

Sex differences in the use of social information emerge under conditions of risk

Social learning provides an effective route to gaining up-to-date information, particularly when information is costly to obtain asocially. Theoretical work predicts that the willingness to switch between using asocial and social sources of information will vary between individuals according to their risk tolerance. We tested the prediction that, where there are sex differences in risk tolerance, altering the variance of the payoffs of using asocial and social information differentially influences the probability of social information use by sex. In a computer-based task that involved building a virtual spaceship, men and women (N = 88) were given the option of using either asocial or social sources of information to improve their performance. When the asocial option was risky (i.e., the participant’s score could markedly increase or decrease) and the social option was safe (i.e., their score could slightly increase or remain the same), women, but not men, were more likely to use the social option than the asocial option. In all other conditions, both women and men preferentially used the asocial option to a similar degree. We therefore found both a sex difference in risk aversion and a sex difference in the preference for social information when relying on asocial information was risky, consistent with the hypothesis that levels of risk-aversion influence the use of social information.

Higher-order risk preferences in social settings

We study prudence and temperance (next to risk aversion) in social settings. Previous experimental studies have shown that these higher-order risk preferences affect the choices of individuals deciding privately on lotteries that only affect their own payoff. Yet, many risky and financially relevant decisions are made in the social settings of households or organizations. We elicit higher-order risk preferences of individuals and systematically vary how an individual's decision is made (alone or while communicating with a partner) and who is affected by the decision (only the individual or the partner as well). In doing so, we can isolate the effects of other-regarding concerns and communication on choices. Our results reveal that the majority of choices are risk averse, prudent, and temperate across social settings. We also observe that individuals are influenced significantly by the preferences of a partner when they are able to communicate and choices are payoff-relevant for both of them.

Risk aversion and willingness to pay for water quality: The case of non-farm rural residents

Stated choice experiments are used to investigate the economic valuation of rural residents living in the province of Quebec for water quality improvements. In Quebec, rural residents played an important role in the setting of stricter environmental regulations. Unlike most stated choice experiments about the valuation of improvements in water quality, this study explicitly accounts for risk in the design and analysis of choice experiments. Risk in phosphorus and coliform reductions is introduced through a three-point uniform distribution in the choice sets. The results show greater support for constant absolute risk aversion preferences than for constant relative risk aversion. Rural residents value coliform and phosphorus reductions and the more educated ones are particularly willing to see the government tax farmers and taxpayers to secure such reductions. As the science improves and risk in water quality outcomes decrease and as the political weight of non-farm rural residents increase, it should be easier for governments to replace voluntary cost-share programs by polluter-payer programs.

A model-based analysis of decision making under risk in obsessive-compulsive and hoarding disorders

Attitudes towards risk are highly consequential in clinical disorders thought to be prone to "risky behavior", such as substance dependence, as well as those commonly associated with excessive risk aversion, such as obsessive-compulsive disorder (OCD) and hoarding disorder (HD). Moreover, it has recently been suggested that attitudes towards risk may serve as a behavioral biomarker for OCD. We investigated the risk preferences of participants with OCD and HD using a novel adaptive task and a quantitative model from behavioral economics that decomposes risk preferences into outcome sensitivity and probability sensitivity. Contrary to expectation, compared to healthy controls, participants with OCD and HD exhibited less outcome sensitivity, implying less risk aversion in the standard economic framework. In addition, risk attitudes were strongly correlated with depression, hoarding, and compulsion scores, while compulsion (hoarding) scores were associated with more (less) "rational" risk preferences. These results demonstrate how fundamental attitudes towards risk relate to specific psychopathology and thereby contribute to our understanding of the cognitive manifestations of mental disorders. In addition, our findings indicate that the conclusion made in recent work that decision making under risk is unaltered in OCD is premature.

Enhanced Risk Aversion, But Not Loss Aversion, in Unmedicated Pathological Anxiety

BACKGROUND

Anxiety disorders are associated with disruptions in both emotional processing and decision making. As a result, anxious individuals often make decisions that favor harm avoidance. However, this bias could be driven by enhanced aversion to uncertainty about the decision outcome (e.g., risk) or aversion to negative outcomes (e.g., loss). Distinguishing between these possibilities may provide a better cognitive understanding of anxiety disorders and hence inform treatment strategies.

METHODS

To address this question, unmedicated individuals with pathological anxiety (n = 25) and matched healthy control subjects (n = 23) completed a gambling task featuring a decision between a gamble and a safe (certain) option on every trial. Choices on one type of gamble-involving weighing a potential win against a potential loss (mixed)-could be driven by both loss and risk aversion, whereas choices on the other type-featuring only wins (gain only)-were exclusively driven by risk aversion. By fitting a computational prospect theory model to participants' choices, we were able to reliably estimate risk and loss aversion and their respective contribution to gambling decisions.

RESULTS

Relative to healthy control subjects, pathologically anxious participants exhibited enhanced risk aversion but equivalent levels of loss aversion.

CONCLUSIONS

Individuals with pathological anxiety demonstrate clear avoidance biases in their decision making. These findings suggest that this may be driven by a reduced propensity to take risks rather than a stronger aversion to losses. This important clarification suggests that psychological interventions for anxiety should focus on reducing risk sensitivity rather than reducing sensitivity to negative outcomes per se.

Sliding doors: Did drama-based inter-professional education improve the tensions round person-centred nursing and social care delivery for people with dementia: A mixed method exploratory study

This educational intervention takes place when the population of older people with dementia is increasing. Health and Social care professionals must work jointly in increasingly complex contexts. Negative attitudes towards older people are cited as a contributor to poor care delivery, including the use of dismissive and/or patronising language, failing to meet fundamental needs and afford choice. 'Sliding Doors to Personal Futures' is a joint, drama-based, educational initiative between NHS Education Scotland and the Scottish Social Services Council, delivered using interprofessional education (IPE) towards encouraging person-centred health and social care. This paper considers whether 'Sliding Doors' had an impact on social work and nursing students' attitudes to older people, person-centred care and interprofessional collaboration. Two groups of third year students were studied; one from nursing and one from social work. A mixed methods approach was taken and attitudes and attitudinal shifts measured and discussed. Quantitative results demonstrated that social work students made positive attitudinal shifts in some questionnaire items and collectively the social work students were more person-centred than nursing students in their care approaches. The qualitative data however, drawn from focus groups, illuminated these results and highlighted the link between the ability for a professional to be person-centred and the conceptual view of risk within the particular profession. Risk acceptance, the theoretical position of social work, may facilitate person-centred care, whereas the perceived risk-averse nature of the nursing profession may inhibit it. Students' attempts to understand the quantitative results, without understanding the restrictions and parameters of each other's profession, led them to revert to stereotypes and negative views of each other as practitioners. The paper concludes that there is an important difference between nurses' and social workers' frames of reference. It is suggested that IPE in its current form will not impact positively on outcomes for older people, unless both professions can openly acknowledge the reality of their professional contexts and develop an understanding of each other's professional restrictions, opportunities and aspirations.

Doctor-patient differences in risk and time preferences: A field experiment

We conduct a framed field experiment among patients and doctors to test whether the two groups have similar risk and time preferences. We elicit risk and time preferences using multiple price list tests and their adaptations to the healthcare context. Risk and time preferences are compared in terms of switching points in the tests and the structurally estimated behavioural parameters. We find that doctors and patients significantly differ in their time preferences: doctors discount future outcomes less heavily than patients. We find no evidence that doctors and patients systematically differ in their risk preferences in the healthcare domain.

Newsvendor problem under complete uncertainty: a case of innovative products

The paper presents a new scenario-based decision rule for the classical version of the newsvendor problem (NP) under complete uncertainty (i.e. uncertainty with unknown probabilities). So far, NP has been analyzed under uncertainty with known probabilities or under uncertainty with partial information (probabilities known incompletely). The novel approach is designed for the sale of new, innovative products, where it is quite complicated to define probabilities or even probability-like quantities, because there are no data available for forecasting the upcoming demand via statistical analysis. The new procedure described in the contribution is based on a hybrid of Hurwicz and Bayes decision rules. It takes into account the decision maker's attitude towards risk (measured by coefficients of optimism and pessimism) and the dispersion (asymmetry, range, frequency of extremes values) of payoffs connected with particular order quantities. It does not require any information about the probability distribution.

Later-borns Don't Give Up: The Temporary Effects of Birth Order on European Earnings

The existing empirical evidence on the effects of birth order on wages does not distinguish between temporary and permanent effects. Using data from 11 European countries for males born between 1935 and 1956, we show that firstborns enjoy on average a 13.7% premium in their entry wage compared with later-borns. This advantage, however, is short-lived and disappears 10 years after labor market entry. Although firstborns start with a better job, partially because of their higher education, later-borns quickly catch up by switching earlier and more frequently to better-paying jobs. We argue that a key factor driving our findings is that later-borns have lower risk aversion than firstborns.

Endogenous time-varying risk aversion and asset returns

Stylized facts about statistical properties for short horizon returns in financial markets have been identified in the literature, but a satisfactory understanding for their manifestation is yet to be achieved. In this work, we show that a simple asset pricing model with representative agent is able to generate time series of returns that replicate such stylized facts if the risk aversion coefficient is allowed to change endogenously over time in response to unexpected excess returns under evolutionary forces. The same model, under constant risk aversion, would instead generate returns that are essentially Gaussian. We conclude that an endogenous time-varying risk aversion represents a very parsimonious way to make the model match real data on key statistical properties, and therefore deserves careful consideration from economists and practitioners alike.

Decision-making under uncertainty in obsessive-compulsive disorder

Obsessive compulsive disorder (OCD) produces profound morbidity. Difficulties with decision-making and intolerance of uncertainty are prominent clinical features in many patients. The nature and etiology of these deficits are poorly understood. We used a well-validated choice task, grounded in behavioral economic theory, to investigate differences in valuation and value-based choice during decision making under uncertainty in 20 unmedicated participants with OCD and 20 matched healthy controls. Participants' choices were used to assess individual decision-making characteristics. OCD participants did not differ from healthy controls in how they valued uncertain options when outcome probabilities were known (risk) but were more likely than healthy controls to avoid uncertain options when these probabilities were imprecisely specified (ambiguity). Compared to healthy controls, individuals with OCD were less consistent in their choices and less able to identify options that should be clearly preferable. These abnormalities correlated with symptom severity. These results suggest that value-based choices during decision-making are abnormal in OCD. Individuals with OCD show elevated intolerance of uncertainty, but only when outcome probabilities are themselves uncertain. Future research focused on the neural valuation network, which is implicated in value-based computations, may provide new neurocognitive insights into the pathophysiology of OCD. Deficits in decision-making processes may represent a target for therapeutic intervention.

Optimal health insurance for multiple goods and time periods

We examine the efficiency-based arguments for second-best optimal health insurance with multiple treatment goods and multiple time periods. Correlated shocks across health care goods and over time interact with complementarity and substitutability to affect optimal cost sharing. Health care goods that are substitutes or have positively correlated demand shocks should have lower optimal patient cost sharing. Positive serial correlations of demand shocks and uncompensated losses that are positively correlated with covered health services also reduce optimal cost sharing. Our results rationalize covering pharmaceuticals and outpatient spending more fully than is implied by static, one good, or one period models.

Cross-sectional survey: risk-averse French general practitioners are more favorable toward influenza vaccination

OBJECTIVES

We tested the following hypotheses: (i) risk-averse general practitioners (GPs) are more likely to be vaccinated against influenza; (ii) and risk-averse GPs recommend influenza vaccination more often to their patients. In risk-averse GPs, the perceived benefits of the vaccine and/or the perceived risks of the infectious disease might indeed outweigh the perceived risks of the vaccine.

PATIENTS/METHODS

In 2010-2012, we conducted a cross-sectional survey of a nationwide French representative sample of 1136 GPs. Multivariate analyses adjusted for four stratification variables (age, gender, urban/suburban/rural practice location and annual patient consultations) and for GPs' characteristics (group/solo practice, and occasional practice of alternative medicine, e.g., homeopathy) looked for associations between their risk attitudes and self-reported vaccination behavior. Individual risk attitudes were expressed as a continuous variable, from 0 (risk-tolerant) to 10 (risk-averse).

RESULTS

Overall, 69% of GPs reported that they were very favorable toward vaccination in general. Self-reported vaccination coverage was 78% for 2009/2010 seasonal influenza and 62% for A/H1N1 pandemic influenza. Most GPs (72%) reported recommending the pandemic influenza vaccination to at-risk young adults in 2009, but few than half (42%) to young adults not at risk. In multivariate analyses, risk-averse GPs were more often vaccinated against seasonal (marginal effect=1.3%, P=0.02) and pandemic influenza (marginal effect=1.5%, P=0.02). Risk-averse GPs recommended the pandemic influenza vaccination more often than their more risk-tolerant colleagues to patients without risk factors (marginal effect=1.7%, P=0.01), but not to their at-risk patients and were more favorable toward vaccination in general (marginal effect=1.5%, P=0.04).

CONCLUSION

Individual risk attitudes may influence GPs' practices regarding influenza vaccination, both for themselves and their patients. Our results suggest that risk-averse GPs may perceive the risks of influenza to outweigh the potential risks related to the vaccine.

Bush encroachment control and risk management in semi-arid rangelands

We study the role of bush encroachment control for a farmer's income and income risk in a stochastic ecological-economic model of grazing management in semi-arid rangelands. In particular, we study debushing as an instrument of risk management that complements the choice of an adaptive grazing management strategy for that sake. We show that debushing, while being a good practice for increasing the mean pasture productivity and thus expected income, also increases the farmer's income risk. The optimal extent of debushing for a risk-averse farmer is thus determined from balancing the positive and negative consequences of debushing on intertemporal and stochastic farm income.

Expected utility of voluntary vaccination in the middle of an emergent Bluetongue virus serotype 8 epidemic: a decision analysis parameterized for Dutch circumstances

In order to put a halt to the Bluetongue virus serotype 8 (BTV-8) epidemic in 2008, the European Commission promoted vaccination at a transnational level as a new measure to combat BTV-8. Most European member states opted for a mandatory vaccination campaign, whereas the Netherlands, amongst others, opted for a voluntary campaign. For the latter to be effective, the farmer's willingness to vaccinate should be high enough to reach satisfactory vaccination coverage to stop the spread of the disease. This study looked at a farmer's expected utility of vaccination, which is expected to have a positive impact on the willingness to vaccinate. Decision analysis was used to structure the vaccination decision problem into decisions, events and payoffs, and to define the relationships among these elements. Two scenarios were formulated to distinguish farmers' mindsets, based on differences in dairy heifer management. For each of the scenarios, a decision tree was run for two years to study vaccination behaviour over time. The analysis was done based on the expected utility criterion. This allows to account for the effect of a farmer's risk preference on the vaccination decision. Probabilities were estimated by experts, payoffs were based on an earlier published study. According to the results of the simulation, the farmer decided initially to vaccinate against BTV-8 as the net expected utility of vaccination was positive. Re-vaccination was uncertain due to less expected costs of a continued outbreak. A risk averse farmer in this respect is more likely to re-vaccinate. When heifers were retained for export on the farm, the net expected utility of vaccination was found to be generally larger and thus was re-vaccination more likely to happen. For future animal health programmes that rely on a voluntary approach, results show that the provision of financial incentives can be adjusted to the farmers' willingness to vaccinate over time. Important in this respect are the decision moment and the characteristics of the disease. Farmers' perceptions of the disease risk and about the efficacy of available control options cannot be neglected.

Factors determining pesticide use practices by farmers in the Sultanate of Oman

In a study of pesticide use on farms in Oman, over 200 respondents were surveyed from amongst owners of and workers on farms that belonged to a Farmers' Association (FA) and those that did not belong to the FA. A questionnaire was used to gauge attitudes to pesticide use whilst inventories of active ingredients were taken for all farms. The age profiles of the respondents were broadly similar, as was the distribution of nationalities amongst the workers. Workers and owners of FA farms were better educated than respondents from non-member farms. A majority of non-FA farm workers reported that they always used pesticides, fewer FA member farm workers and non-FA farm owners reported this behaviour with FA owners showing the lowest proportion of respondents who always used pesticides. Responses amongst farm owners to questions about frequency of pesticide use suggested that this was unaffected by age or education status, but for farm workers younger or less well educated respondents were more likely to respond by indicating that pesticides were always used. When asked to rate pesticides on a scale of 1 (bad) to 10 (good), high responses were most frequent amongst non-FA farm workers followed by FA member farm workers and non-FA farm owners. On average FA farm owners had the lowest average response, and responses by all groups were unaffected by age or education status. Prohibited pesticide use was higher on non-FA farms (4.9% of all pesticides) than on FA farms (1.3%). Pesticide products observed on FA member farms generally contained newer classes of active ingredients and were most frequently from major manufacturing companies in Europe, North America and Japan. Older, off-patent active ingredient-containing products were frequently observed on non-FA farms, often from so-called 'me-too' producing companies in Asia, the Middle East and North Africa.

Very low birthweight: dysregulated gestation versus evolutionary adaptation

Much medical literature attributes persistently high rates of very low birthweight (VLBW) to "dysregulated" gestation. We offer the alternative view that natural selection conserved well-regulated, though nonconscious, decisional biology that protects the reproductive fitness of women by spontaneously aborting gestations that would otherwise yield frail infants, particularly small males. Modern obstetric practice, however, converts some fraction of these erstwhile spontaneous abortions into live births of very small infants. We further propose that the nonconscious decisional biology of gestation exhibits preferences also seen in consciously made decisions. We hypothesize that the incidence of VLBW among male infants should vary with the population's self-reported intentions to assume financial risk. We apply time-series modeling to monthly birth counts by sex and weight from the Swedish Medical Birth Registry between January 1993 and December 2010. We gauge risk aversion with monthly data from the Micro Index of the Swedish Consumer Tendency Survey (MISCT). Consistent with our argument that nonconscious decisional biology shares risk aversion with conscious decisions, we find that the incidence of VLBW among male infants in Sweden varies with the population's self-reported intentions to assume financial risk. We find increases above expected odds of a very low weight infant among males born 1 month after increases above expected levels of self-reported risk aversion in the Swedish population. We offer this finding as support for the argument that persistently high rates of VLBW arise, at least in part, from a combination of medical interventions and mechanisms conserved by natural selection to protect reproductive fitness.

Salivary testosterone change following monetary wins and losses predicts future financial risk-taking

While baseline testosterone has recently been implicated in risk-taking in men, less is known about the effects of changing levels of testosterone on financial risk. Here we attempt to influence testosterone in men by having them win or lose money in a chance-based competition against another male opponent. We employ two treatments where we vary the amount of money at stake so that we can directly compare winners to losers who earn the same amount, thereby abstracting from income effects. We find that men who experience a greater increase in bioactive testosterone take on more risk, an association that remains when controlling for whether the participant won the competition. In fact, whether subjects won the competition did not predict future risk. These results suggest that testosterone change, and thus individual differences in testosterone reactivity, rather than the act of winning or losing, influence financial risk-taking.

Estimating the subjective risks of driving simulator accidents

We examine the subjective risks of driving behavior using a controlled virtual reality experiment. Use of a driving simulator allows us to observe choices over risky alternatives that are presented to the individual in a naturalistic manner, with many of the cues one would find in the field. However, the use of a simulator allows us the type of controls one expects from a laboratory environment. The subject was tasked with making a left-hand turn into incoming traffic, and the experimenter controlled the headways of oncoming traffic. Subjects were rewarded for making a successful turn, and lost income if they crashed. The experimental design provided opportunities for subjects to develop subjective beliefs about when it would be safe to turn, and it also elicited their attitudes towards risk. A simple structural model explains behavior, and showed evidence of heterogeneity in both the subjective beliefs that subjects formed and their risk attitudes. We find that subjective beliefs change with experience in the task and the driver's skill. A significant difference was observed in the perceived probability to successfully turn among the inexperienced drivers who did and did not crash even though there was no significant difference in drivers' risk attitudes among the two groups. We use experimental economics to design controlled, incentive compatible tasks that provide an opportunity to evaluate the impact on driver safety of subject's subjective beliefs about when it would be safe to turn as well as their attitudes towards risk. This method could be used to help insurance companies determine risk premia associated with risk attitudes or beliefs of crashing, to better incentivize safe driving.

An expected utility maximizer walks into a bar…

We conducted field experiments at a bar to test whether blood alcohol concentration (BAC) correlates with violations of the generalized axiom of revealed preference (GARP) and the independence axiom. We found that individuals with BACs well above the legal limit for driving adhere to GARP and independence at rates similar to those who are sober. This finding led to the fielding of a third experiment to explore how risk preferences might vary as a function of BAC. We found gender-specific effects: Men did not exhibit variations in risk preferences across BACs. In contrast, women were more risk averse than men at low BACs but exhibited increasing tolerance towards risks as BAC increased. Based on our estimates, men and women's risk preferences are predicted to be identical at BACs nearly twice the legal limit for driving. We discuss the implications for policy-makers.

How General are Risk Preferences? Choices under Uncertainty in Different Domains

We analyze the extent to which individuals' choices over five employer-provided insurance coverage decisions and one 401(k) investment decision exhibit systematic patterns, as would be implied by a general utility component of risk preferences. We provide evidence consistent with an important domain-general component that operates across all insurance choices. We find a considerably weaker relationship between one's insurance decisions and 401(k) asset allocation, although this relationship appears larger for more "financially sophisticated" individuals. Estimates from a stylized coverage choice model suggest that up to thirty percent of our sample makes choices that may be consistent across all six domains.