Investment behavior and the negative side of emotion

Curiosity is more than novelty seeking

The novelty-seeking model (NSM) does not offer a compelling unifying framework for understanding creativity and curiosity. It fails to explain important manifestations and features of curiosity. Moreover, the arguments offered to support a curiosity-creativity link - a shared association with a common core process and various superficial associations between them - are neither convincing nor do they yield useful predictions.

Highly logical and non-emotional decisions in both risky and social contexts: understanding decision making in autism spectrum disorder through computational modeling

In risky contexts, autism spectrum disorder (ASD) individuals exhibit more logical consistency and non-emotional decisions than do typical adults (TAs). This way of deciding could be also prevailing in social contexts, leading to maladaptive decisions. This evidence is scarce and inconsistent, and further research is needed. Recent developments in computational modeling allow analysis of decisional subcomponents that could provide valuable information to understand the decision-making and help address inconsistencies. Twenty-seven individuals with ASD and 25 TAs were submitted to a framing-task and the ultimatum game (UG). The Rescorla-Wagner computational model was used to analyze UG decisions. Results showed that in the UG, the ASD group exhibited a higher utilitarianism, characterized by lower aversion to unfairness and higher acceptance of offers. Moreover, this way of deciding was predicted by the higher economic rationality found in the framing task, where people with ASD did not manifest emotional biases such as framing effect. These results could suggest an atypical decision making, highly logical and non-emotional, as a robust feature of ASD.

Looking on the (B)right Side of Life: Cognitive Ability and Miscalibrated Financial Expectations

It is a puzzle why humans tend toward unrealistic optimism, as it can lead to excessively risky behavior and a failure to take precautionary action. Using data from a large nationally representative U.K. sample ( N = 36 , 312 ) , our claim is that optimism bias is partly a consequence of low cognition-as measured by a broad range of cognitive skills, including memory, verbal fluency, fluid reasoning and numerical reasoning. We operationalize unrealistic optimism as the difference between a person's financial expectation and the financial realization that follows, measured annually over a decade. All else being equal, those highest on cognitive ability experience a 22% (53.2%) increase in the probability of realism (pessimism) and a 34.8% reduction in optimism compared with those lowest on cognitive ability. This suggests that the negative consequences of an excessively optimistic mindset may, in part, be a side product of the true driver, low cognitive ability.

Excitatory stimulation of the ventromedial prefrontal cortex reduces cognitive gambling biases via improved feedback learning

Humans are subject to a variety of cognitive biases, such as the framing-effect or the gambler's fallacy, that lead to decisions unfitting of a purely rational agent. Previous studies have shown that the ventromedial prefrontal cortex (vmPFC) plays a key role in making rational decisions and that stronger vmPFC activity is associated with attenuated cognitive biases. Accordingly, dysfunctions of the vmPFC are associated with impulsive decisions and pathological gambling. By applying a gambling paradigm in a between-subjects design with 33 healthy adults, we demonstrate that vmPFC excitation via transcranial direct current stimulation (tDCS) reduces the framing-effect and the gambler's fallacy compared to sham stimulation. Corresponding magnetoencephalographic data suggest improved inhibition of maladaptive options after excitatory vmPFC-tDCS. Our analyses suggest that the underlying mechanism might be improved reinforcement learning, as effects only emerge over time. These findings encourage further investigations of whether excitatory vmPFC-tDCS has clinical utility in treating pathological gambling or other behavioral addictions.

Neuroeconomics of decision-making during COVID-19 pandemic

The coronavirus disease 2019 (COVID-19) pandemic reveals the decision-making challenges faced by communities, governments, and international organizations, globally. Policymakers are much concerned about protecting the population from the deadly virus while lacking reliable information on the virus and its spread mechanisms and the effectiveness of possible measures and their (direct and indirect) health and socioeconomic costs. This review aims to highlight the various balanced policy decision that would combine the best obtainable scientific evidence characteristically provided by expert opinions and modeling studies. This article's main goal is to summarize the main significant progress in the understanding of neuroeconomics of decision-making and discuss the anatomy of decision making in the light of COVID-19 pandemic.

The Genetics of Risk Aversion: A Systematic Review

Risk and loss aversion are phenomena with an important influence on decision-making, especially in economic contexts. At present, it remains unclear whether both are related, as well as whether they could have an emotional origin. The objective of this review, following the PRISMA statements, is to find consistencies in the genetic bases of risk and loss aversion with the aim of understanding their nature and shedding light on the above issues. A total of 23 empirical research met the inclusion criteria and were included from PubMed and ScienceDirect. All of them reported genetic measures from human samples and studied risk and loss aversion within an economic framework. The results for risk aversion, although with many limitations, attributed mainly to their heterogeneity and the lack of control in the studies, point to the implication of multiple polymorphisms related to the regulation of the serotonergic and dopaminergic pathways. In general, studies found the highest levels of risk aversion were associated with alleles that are linked to lower (higher) sensitivity or levels of dopamine (serotonin). For loss aversion, the scarcity of results prevents us from drawing clear conclusions, although the limited evidence seems to point in the same direction as for risk aversion. Therefore, it seems that risk aversion could have a stable genetical base which, in turn, is closely linked to emotions, but more research is needed to answer whether this phenomenon is related to loss aversion, as well as if the latter could also have an emotional origin. We also provide recommendations for future studies on genetics and economic behavior.

COVID-19 and entrepreneurship entry and exit: Opportunity amidst adversity

We theoretically and empirically examine how acquiring new skills and increased financial worries influenced entrepreneurship entry and exit intentions during the pandemic. To that end, we analyze primary individual-level survey data we collected in the aftermath of the COVID-19's first wave in Russia, which has had one of the highest COVID-19 infection rates globally. Our results show that acquiring new skills during the pandemic helped owners keep their existing businesses and encouraged start-ups in sectors other than information technology (IT). For IT start-ups, having previous experience matters more than new skills. While the pandemic-driven financial worries are associated with business closure intentions, they also inspire new business start-ups, highlighting the pandemic's creative destruction power. Furthermore, preferences for formal employment and remote work also matter for entrepreneurial intentions. Our findings enhance the understanding of entrepreneurship formation and closure in a time of adversity and suggest that implementing entrepreneurship training and upskilling policies during recurring waves of the COVID-19 pandemic can be an important policy tool for innovative small business development.

Taking gambles at face value: Effects of emotional expressions on risky decisions

Emotional facial expressions are ubiquitous and potent social stimuli that can signal favorable and unfavorable conditions. Previous research demonstrates that emotional expressions influence preference judgments, basic approach-avoidance behaviors, and reward learning. We examined whether emotional expressions can influence decisions such as choices between gambles. Based on theories of affective cue processing, we predicted greater risk taking after positive than negative expressions. This hypothesis was tested in four experiments across tasks that varied in implementation of risks, payoffs, probabilities, and temporal decision requirements. Facial expressions were presented unobtrusively and were uninformative about the choice. In all experiments, the likelihood of a risky choice was greater after exposure to positive versus neutral or negative expressions. Similar effects on risky choice occurred after presentation of different negative expressions (e.g., anger, fear, sadness, and disgust), suggesting involvement of general positive and negative affect systems. These results suggest that incidental emotional cues exert a valence-specific influence of on decisions, which could shape risk-taking behavior in social situations.

Do Emotions Benefit Investment Decisions? Anticipatory Emotion and Investment Decisions in Non-professional Investors

Increasing financial trading performance is big business. A lingering question within academia and industry concerns whether emotions improve or degrade trading performance. In this study, 30 participants distributed hypothetical wealth between a share (a risk) and the bank (paying a small, sure, gain) within four trading games. Skin Conductance Response was measured while playing the games to measure anticipatory emotion, a covert emotion signal that impacts decision-making. Anticipatory emotion was significantly associated with trading performance but the direction of the correlation was dependent upon the share’s movement. Thus, anticipatory emotion is neither wholly “good” nor “bad” for trading; instead, the relationship is context-dependent. This is one of the first studies exploring the association between anticipatory emotion and trading behaviour using trading games within an experimentally rigorous environment. Our findings elucidate the relationship between anticipatory emotion and financial decision-making and have applications for improving trading performance in novice and expert traders.

How Power Influences Decision-Makers' Investment Behavior in the Domains of Loss and Gain

We present a study (N = 645) investigating how power alters people’s propensity to take investment risks in a changing decision context of gains and losses and the intensity of their reactions to this experience. The results indicate that people in a state of power made more risky investment decisions than the control group regardless of prior gain or loss outcome, whereas people lacking power took less investment risk than the control group, regardless of previous outcomes. Moreover, people with power and those lacking power differed in their reactions to gains and losses, with the former reacting more to gains and the latter to losses.

Contribution of Eye-Tracking to Study Cognitive Impairments Among Clinical Populations

In the field of psychology, the merge of decision-theory and neuroscientific methods produces an array of scientifically recognized paradigms. For example, by exploring consumer’s eye-movement behavior, researchers aim to deepen the understanding of how patterns of retinal activation are being meaningfully transformed into visual experiences and connected with specific reactions (e.g., purchase). Notably, eye-movements provide knowledge of one’s homeostatic balance and gatekeep information that shape decisions. Hence, vision science investigates the quality of observed environments determined under various experimental conditions. Moreover, it answers questions on how human process visual stimuli and use gained information for a successful strategy to achieve certain goals. While capturing cognitive states with the support of the eye-trackers progresses at a relatively fast pace in decision-making research, measuring the visual performance of real-life tasks, which require complex cognitive skills, is tentatively translated into clinical experiments. Nevertheless, the potential of the human eye as a highly valuable source of biomarkers has been underlined. In this article, we aim to draw readers attention to decision-making experimental paradigms supported with eye-tracking technology among clinical populations. Such interdisciplinary approach may become an important component that will (i) help in objectively illustrating patient’s models of beliefs and values, (ii) support clinical interventions, and (iii) contribute to health services. It is possible that shortly, eye-movement data from decision-making experiments will grant the scientific community a greater understanding of mechanisms underlining mental states and consumption practices that medical professionals consider as obsessions, disorders or addiction.

Reduced decision bias and more rational decision making following ventromedial prefrontal cortex damage

Human decisions are susceptible to biases, but establishing causal roles of brain areas has proved to be difficult. Here we studied decision biases in 17 people with unilateral medial prefrontal cortex damage and a rare patient with bilateral ventromedial prefrontal cortex (vmPFC) lesions. Participants learned to choose which of two options was most likely to win, and then bet money on the outcome. Thus, good performance required not only selecting the best option, but also the amount to bet. Healthy people were biased by their previous bet, as well as by the unchosen option's value. Unilateral medial prefrontal lesions reduced these biases, leading to more rational decisions. Bilateral vmPFC lesions resulted in more strategic betting, again with less bias from the previous trial, paradoxically improving performance overall. Together, the results suggest that vmPFC normally imposes contextual biases, which in healthy people may actually be suboptimal in some situations.

Bridging Ecological Rationality, Embodied Emotion, and Neuroeconomics: Insights From the Somatic Marker Hypothesis

The somatic marker hypothesis (SMH) has been utilized to demonstrate the role of emotion and somatic state in decision-making under uncertainty over the past two decades. Despite some debate, the SMH has provided not only a neurobiological framework for understanding emotion and decision-making but also a good empirical support for ecological rationality and embodied emotion. Unlike the traditional maximizing rationality and bounded satisficing rationality, the ecological rationality stresses that emotions should be brought to the decision-making process. The embodied emotion furthermore emphasizes that emotions are embodied in the body and the brain. On the other hand, behavioral decision-making has spawned many new interdisciplines, including neuroeconomics. In this case, the SMH could act as a bridge to translate the ecological rationality and the embodied emotion into emerging neuroeconomics. Thus, this mini-review article aims to propose an integrated framework for introducing ecological rationality and embodied emotion into the field of neuroeconomics by virtue of insights from the SMH.

Emotion Regulation Tendencies and Leadership Performance: An Examination of Cognitive and Behavioral Regulation Strategies

Emotion regulation is advocated to be an important factor underlying effective leadership given the task demands and interpersonal stressors facing organizational leaders. Despite the recognition of emotion regulation processes in leadership literature, there is a need for additional theorizing and empirical research on the specific cognitive and behavioral strategies utilized by leaders. This effort attempts to address this gap by examining individual tendencies in four emotion regulation strategies, situation modification, attentional deployment, cognitive reappraisal, and suppression, and their association with leadership task performance. Using an undergraduate student sample, this correlational study assessed the relationship between emotion regulation tendencies and performance in emotionally-relevant domains of leadership. Results provide partial support, suggesting that situation modification and cognitive reappraisal are positively related to leadership performance, whereas suppression was found to relate negatively with performance. Emotion regulation strategies were also found to account for variance in leadership performance above and beyond other emotion-related individual differences. Taken together, these findings suggest that certain regulation processes may be more functional for leaders and extend emotion regulation research in the leadership domain. Theoretical and practical implications of this study are discussed.

The neuroanatomical basis of the Gambler's fallacy: A univariate and multivariate morphometric study

Human decision-making can be irrational, as in the case of the gambler's fallacy (GF). Converging evidence from behavioral and functional neuroimaging studies has suggested that a hyperactive cognitive system and a hypo-active affective system contribute to the false world model that generates the GF. However, the neuroanatomical basis underlying the GF remains unclear. The current study addressed this issue by collecting high-resolution magnetic resonance anatomical images from a large sample of 350 healthy Chinese adults. Univariate voxel-based morphometry (VBM) analysis suggested that the gray matter volume (GMV) in the anterior cingulate cortex (ACC) and medial temporal lobe (MTL) (two regions of the cognitive system) showed negative correlations with the degree of GF, while the GMV in the striatum and orbitofrontal cortex (OFC; two regions of the affective system) showed positive correlations. Further multivariate VBM analysis showed that the GMV in these regions could potentially predict the degree of GF. Moreover, a mediation analysis suggested that the GMV in MTL, ACC, and OFC mediated the relationships between the cognitive abilities or affective decision-making performance and the GF. Results of our study help us to understand the potential neural bases of the cognitive system's constructive role and the affective system's destructive role in decision making.

Time-varying risk behavior and prior investment outcomes: Evidence from Italy

Risk behavior can be capricious and may vary from month to month. We study 62 clients of a private bank in Northern Italy. The individuals are of special interest for several reasons. As active traders, they manage the value-at-risk (VaR) of a portion of their wealth portfolios. In addition, they act alone, i.e., without input from a financial adviser. Based on VaR-statistics, we find that, in general, the subjects become more risk-averse after suffering losses and more risk-seeking after experiencing gains. The monthly gains and losses that alter investor risk behavior represent true changes in wealth but are “on paper” only, i.e., not immediately realized. Our results allow several interpretations, but they are not at odds with a house money effect, or the possibility that overconfident investors trade on illusions. Rapidly shifting risk behavior in fast response to unstable circumstances weakens individual risk tolerance as a deep parameter and key construct of finance theory.

Heart versus head: Differential bodily feedback causally alters economic decision-making

Metaphorically, altruistic acts, such as monetary donations, are said to be driven by the heart, whereas sound financial investments are guided by reason, embodied by the head. In a unique experiment, we tested the effects of these bodily metaphors using biofeedback and an incentivized economic decision-making paradigm. Participants played a repeated investment game with a simulated partner, alternating between tactical investor and altruistic investee. When making decisions, participants received counterbalanced visual feedback from their own or a simulated partner's heart or head, as well as no feedback. As investor, participants transferred a greater proportion of their endowments when exposed to visual feedback from their own head than to feedback from their own heart or no feedback at all. These effects were not observed when the source of the feedback was the simulated partner. As investee, heart feedback predicted greater altruistic returns than head or no feedback, but this effect did not differ based on source (own vs partner). Consistent with a dual-process framework, we suggest that people may be encouraged to invest more or be more altruistic when receiving bodily feedback from conceptually diametric sources.

The Ending Effect in Investment Decisions: The Motivational Need for an Emotionally Rewarding Ending

The present study examined the power of endings on risky decision making. With four experiments, the changes in the individuals' risk-taking tendencies were examined as the end of an investment decision task approached; the role of motivational shift toward emotional satisfaction in the ending effect was also explored. As predicted, participants who knew they were working on the last round of an investment task were more risk seeking than those who did not know (i.e., ending effect, Experiment 1). Experiments 2 through 4 examined the motivational mechanism of the ending effect. The results supported the notion that the motivation to pursue an emotionally rewarding ending leads to the ending effect. The present research complements existing motivational accounts of risk taking and suggests a new research direction of integrating factors associated with time perception of an approaching ending into existing models of risky decision making.

Emotions and scope effects in the monetary valuation of health

This study presents evidence on the role of emotions in the monetary evaluation of health technologies, namely, drug-eluting stents (DES) in our case. It is shown that subjects who are very afraid of having to undergo an angioplasty are: (a) less sensitive to the size of the risk reduction provided by DES and (b) willing to pay more. The lack of scope sensitivity questions the normative validity of the responses of highly emotional subjects. We provide evidence of this effect using what we call the cognitive-emotional random utility model and the responses of a face-to-face, computer-assisted personal interview survey conducted in a representative sample of the Spanish general population (n = 1663).

Hold on to it? An experimental analysis of the disposition effect

This paper experimentally investigates a well-known anomaly in portfolio management, i.e., the fact that paper losses are realized less than paper gains (disposition effect). I confirm the existence of the disposition effect in a simple risky task in which choices are taken sequentially. However, when choices are planned ahead and a contingent plan is defined, a reversal in the disposition effect is observed.

The relationship between attention allocation and cheating

Little is known about the relationship between attention allocation and dishonesty. The goal of the present work was to address this issue using the eyetracking methodology. We developed a novel task in which participants could honestly report seeing a particular card and lose money, or they could falsely report not seeing the card and not lose money. When participants cheated, they allocated less attention (i.e., shorter fixation durations and fewer fixations) to the card than when they behaved honestly. Our results suggest that when dishonesty pays, shifting attention away from undesirable information can serve as a self-deception strategy that allows individuals to serve their self-interests while maintaining a positive self-concept.

The effects of surrounding positive and negative experiences on risk taking

Two experiments explored how the context of recently experiencing an abundance of positive or negative outcomes within a series of choices influences risk preferences. In each experiment, choices were made between a series of pairs of hypothetical 50/50 two-outcome gambles. Participants experienced a control set of mixed outcome gamble pairs intermingled with a randomly assigned set of (a) all-gain, (b) all-loss, or (c) a mixture of all-gain and all-loss gamble pairs. In both experiments, a positive experience led to reduced risk taking in the control set and a negative experience led to increased risk taking. These patterns persisted even after the all-gain and all-loss gamble pairs were no longer present. In addition, we showed that the good luck attributed to positive experiences was associated with decreased, rather than increased, risk taking. These results ran counter to the house money effect, and could not readily be accounted for by changes in assets. We suggest that the goals associated with the predominant valence are likely to be assimilated and applied to other choices within a given situation. We also discuss the need to learn more about the characteristics of choice bracketing and mental accounting that influence which aspects of situational context will be included or excluded from consideration when making each choice.

Do Emotions Expressed Online Correlate with Actual Changes in Decision-Making?: The Case of Stock Day Traders

Emotions are increasingly inferred linguistically from online data with a goal of predicting off-line behavior. Yet, it is unknown whether emotions inferred linguistically from online communications correlate with actual changes in off-line activity. We analyzed all 886,000 trading decisions and 1,234,822 instant messages of 30 professional day traders over a continuous 2 year period. Linguistically inferring the traders’ emotional states from instant messages, we find that emotions expressed in online communications reflect the same distributions of emotions found in controlled experiments done on traders. Further, we find that expressed online emotions predict the profitability of actual trading behavior. Relative to their baselines, traders who expressed little emotion or traders that expressed high levels of emotion made relatively unprofitable trades. Conversely, traders expressing moderate levels of emotional activation made relatively profitable trades.

Dissociable effects of basolateral amygdala lesions on decision making biases in rats when loss or gain is emphasized

Individuals switch from risk seeking to risk aversion when mathematically identical options are described in terms of loss versus gains, as exemplified in the reflection and framing effects. Determining the neurobiology underlying such cognitive biases could inform our understanding of decision making in health and disease. Although reports vary, data using human subjects have implicated the amygdala in such biases. Animal models enable more detailed investigation of neurobiological mechanisms. We therefore tested whether basolateral amygdala (BLA) lesions would affect risk preference for gains or losses in rats. Choices in both paradigms were always between options of equal expected value-a guaranteed outcome, or the 50:50 chance of double or nothing. In the loss-chasing task, most rats exhibited strong risk seeking preferences, gambling at the risk of incurring double the penalty, regardless of the size of the guaranteed loss. In the betting task, the majority of animals were equivocal in their choice, irrespective of bet size; however, a wager-sensitive subgroup progressively shifted away from the uncertain option as the bet size increased, which is reminiscent of risk aversion. BLA lesions increased preference for the smaller guaranteed loss in the loss-chasing task, without affecting choice on the betting task, which is indicative of reduced risk seeking for losses, but intact risk aversion for gains. These data support the hypothesis that the amygdala plays a more prominent role in choice biases related to losses. Given the importance of the amygdala in representing negative affect, the aversive emotional reaction to loss, rather than aberrant estimations of probability or loss magnitude, may underlie risk seeking for losses.

Follow the heart or the head? The interactive influence model of emotion and cognition

The experience of emotion has a powerful influence on daily-life decision making. Following Plato's description of emotion and reason as two horses pulling us in opposite directions, modern dual-system models of decision making endorse the antagonism between reason and emotion. Decision making is perceived as the competition between an emotion system that is automatic but prone to error and a reason system that is slow but rational. The reason system (in "the head") reins in our impulses (from "the heart") and overrides our snap judgments. However, from Darwin's evolutionary perspective, emotion is adaptive, guiding us to make sound decisions in uncertainty. Here, drawing findings from behavioral economics and neuroeconomics, we provide a new model, labeled "The interactive influence model of emotion and cognition," to elaborate the relationship of emotion and reason in decision making. Specifically, in our model, we identify factors that determine when emotions override reason and delineate the type of contexts in which emotions help or hurt decision making. We then illustrate how cognition modulates emotion and how they cooperate to affect decision making.

Effects of working memory load on uncertain decision-making: evidence from the Iowa Gambling Task

The Iowa Gambling Task (IGT) simulates uncertain gains and losses in real life situations and thus is a good measure of uncertain decision-making. The role of working memory (WM) in IGT performance still remains unclear. The present study aimed to examine the effect of WM on IGT performance. Three groups of participants matched on gender ratio were randomly assigned to no WM load, low WM load, and high WM load conditions. Initially the three groups did not show significant difference in WM capacity. They finished a modified version of IGT and then their implicit learning effect and explicit cognition on IGT were assessed. Results indicated a linear increasing trend of IGT performance among high WM load, low WM load and no WM load groups; participants in the no WM load and low WM load groups revealed implicit learning effect, while participants in the high WM load group did not; all participants showed explicit cognition on IGT to the same level. These results suggested that participants in the high WM load group showed good explicit cognition to IGT but showed poor performance. This pattern is similar to frontal patients. Further studies should be conducted to explore this issue.

Neural basis of decision making guided by emotional outcomes

Emotional events resulting from a choice influence an individual's subsequent decision making. Although the relationship between emotion and decision making has been widely discussed, previous studies have mainly investigated decision outcomes that can easily be mapped to reward and punishment, including monetary gain/loss, gustatory stimuli, and pain. These studies regard emotion as a modulator of decision making that can be made rationally in the absence of emotions. In our daily lives, however, we often encounter various emotional events that affect decisions by themselves, and mapping the events to a reward or punishment is often not straightforward. In this study, we investigated the neural substrates of how such emotional decision outcomes affect subsequent decision making. By using functional magnetic resonance imaging (fMRI), we measured brain activities of humans during a stochastic decision-making task in which various emotional pictures were presented as decision outcomes. We found that pleasant pictures differentially activated the midbrain, fusiform gyrus, and parahippocampal gyrus, whereas unpleasant pictures differentially activated the ventral striatum, compared with neutral pictures. We assumed that the emotional decision outcomes affect the subsequent decision by updating the value of the options, a process modeled by reinforcement learning models, and that the brain regions representing the prediction error that drives the reinforcement learning are involved in guiding subsequent decisions. We found that some regions of the striatum and the insula were separately correlated with the prediction error for either pleasant pictures or unpleasant pictures, whereas the precuneus was correlated with prediction errors for both pleasant and unpleasant pictures.

Implicit emotion regulation affects outcome evaluation

Efficient implicit emotion regulation processes, which run without awareness, are important for human well-being. In this study, to investigate the influence of implicit emotion regulation on psychological and electrophysiological responses to gains and losses, participants were required to select between two Chinese four-character idioms to match the meaning of the third one before they performed a monetary gambling task. According to whether their meanings were related to emotion regulation, the idioms fell into two categories. Event-related potentials and self-rating emotional experiences to outcome feedback were recorded during the task. Priming emotion regulation reduced subjective emotional experience to both gains and losses and the amplitudes of the feedback-related negativity, while the P3 component was not influenced. According to these results, we suggest that the application of implicit emotion regulation effectively modulated the subjective emotional experience and the motivational salience of current outcomes without the cost of cognitive resources. This study implicates the potential significance of implicit emotion regulation in decision-making processes.

Behavioral variant frontotemporal dementia patients do not succumb to the Allais paradox

The Allais Paradox represents one of the earliest empirical challenges to normative models of decision-making, and suggests that choices in one part of a gamble may depend on the possible outcome in another, independent, part of the gamble-a violation of the so-called "independence axiom." To account for Allaisian behavior, one well-known class of models propose that individuals' choices are influenced not only by possible outcomes resulting from one's choices, but also the anticipation of regret for foregone options. Here we test the regret hypothesis using a population of patients with behavioral variant frontotemporal dementia (bvFTD), a clinical population known to present ventromedial prefrontal cortex dysfunctions and associated with impaired regret processing in previous studies of decision-making. Compared to matched controls and Alzheimer's disease (AD) patients, we found a striking diminution of Allaisian behavior among bvFTD patients. These results are consistent with the regret hypothesis and furthermore suggest a crucial role for prefrontal regions in choices that typically stands in contradiction with a basic axiom of rational decision-making.

Insights into human behavior from lesions to the prefrontal cortex

The prefrontal cortex (PFC), a cortical region that was once thought to be functionally insignificant, is now known to play an essential role in the organization and control of goal-directed thought and behavior. Neuroimaging, neurophysiological, and modeling techniques have led to tremendous advances in our understanding of PFC functions over the last few decades. It should be noted, however, that neurological, neuropathological, and neuropsychological studies have contributed some of the most essential, historical, and often prescient conclusions regarding the functions of this region. Importantly, examination of patients with brain damage allows one to draw conclusions about whether a brain area is necessary for a particular function. Here, we provide a broad overview of PFC functions based on behavioral and neural changes resulting from damage to PFC in both human patients and nonhuman primates.

Risky business: rhesus monkeys exhibit persistent preferences for risky options

Rhesus monkeys have been shown to prefer risky over safe options in experiential decision-making tasks. These findings might be due, however, to specific contextual factors, such as small amounts of fluid reward and minimal costs for risk-taking. To better understand the factors affecting decision-making under risk in rhesus monkeys, we tested multiple factors designed to increase the stakes including larger reward amounts, distinct food items rather than fluid reward, a smaller number of trials per session, and risky options with greater variation that also included non-rewarded outcomes. We found a consistent preference for risky options, except when the expected value of the safe option was greater than the risky option. Thus, with equivalent mean utilities between the safe and risky options, rhesus monkeys appear to have a robust preference for the risky options in a broad range of circumstances, akin to the preferences found in human children and some adults in similar tasks. One account for this result is that monkeys make their choices based on the salience of the largest payoff, without integrating likelihood and value across trials. A related idea is that they fail to override an impulsive tendency to select the option with the potential to obtain the highest possible outcome. Our results rule out strict versions of both accounts and contribute to an understanding of the diversity of risky decision-making among primates.

Damage to insula abolishes cognitive distortions during simulated gambling

Gambling is a naturalistic example of risky decision-making. During gambling, players typically display an array of cognitive biases that create a distorted expectancy of winning. This study investigated brain regions underpinning gambling-related cognitive distortions, contrasting patients with focal brain lesions to the ventromedial prefrontal cortex (vmPFC), insula, or amygdala ("target patients") against healthy comparison participants and lesion comparison patients (i.e., with lesions that spare the target regions). A slot machine task was used to deliver near-miss outcomes (i.e., nonwins that fall spatially close to a jackpot), and a roulette game was used to examine the gambler's fallacy (color decisions following outcome runs). Comparison groups displayed a heightened motivation to play following near misses (compared with full misses), and manifested a classic gambler's fallacy effect. Both effects were also observed in patients with vmPFC and amygdala damage, but were absent in patients with insula damage. Our findings indicate that the distorted cognitive processing of near-miss outcomes and event sequences may be ordinarily supported by the recruitment of the insula. Interventions to reduce insula reactivity could show promise in the treatment of disordered gambling.

Pathological choice: the neuroscience of gambling and gambling addiction

Gambling is pertinent to neuroscience research for at least two reasons. First, gambling is a naturalistic and pervasive example of risky decision making, and thus gambling games can provide a paradigm for the investigation of human choice behavior and "irrationality." Second, excessive gambling involvement (i.e., pathological gambling) is currently conceptualized as a behavioral addiction, and research on this condition may provide insights into addictive mechanisms in the absence of exogenous drug effects. This article is a summary of topics covered in a Society for Neuroscience minisymposium, focusing on recent advances in understanding the neural basis of gambling behavior, including translational findings in rodents and nonhuman primates, which have begun to delineate neural circuitry and neurochemistry involved.

Mood and the market: can press reports of investors' mood predict stock prices?

We examined whether press reports on the collective mood of investors can predict changes in stock prices. We collected data on the use of emotion words in newspaper reports on traders' affect, coded these emotion words according to their location on an affective circumplex in terms of pleasantness and activation level, and created indices of collective mood for each trading day. Then, by using time series analyses, we examined whether these mood indices, depicting investors' emotion on a given trading day, could predict the next day's opening price of the stock market. The strongest findings showed that activated pleasant mood predicted increases in NASDAQ prices, while activated unpleasant mood predicted decreases in NASDAQ prices. We conclude that both valence and activation levels of collective mood are important in predicting trend continuation in stock prices.

Agency modulates the lateral and medial prefrontal cortex responses in belief-based decision making

Many real-life decisions in complex and changing environments are guided by the decision maker's beliefs, such as her perceived control over decision outcomes (i.e., agency), leading to phenomena like the "illusion of control". However, the neural mechanisms underlying the "agency" effect on belief-based decisions are not well understood. Using functional imaging and a card guessing game, we revealed that the agency manipulation (i.e., either asking the subjects (SG) or the computer (CG) to guess the location of the winning card) not only affected the size of subjects' bets, but also their "world model" regarding the outcome dependency. Functional imaging results revealed that the decision-related activation in the lateral and medial prefrontal cortex (PFC) was significantly modulated by agency and previous outcome. Specifically, these PFC regions showed stronger activation when subjects made decisions after losses than after wins under the CG condition, but the pattern was reversed under the SG condition. Furthermore, subjects with high external attribution of negative events were more affected by agency at the behavioral and neural levels. These results suggest that the prefrontal decision-making system can be modulated by abstract beliefs, and are thus vulnerable to factors such as false agency and attribution.

The gambler's fallacy is associated with weak affective decision making but strong cognitive ability

Humans demonstrate an inherent bias towards making maladaptive decisions, as shown by a phenomenon known as the gambler's fallacy (GF). The GF has been traditionally considered as a heuristic bias supported by the fast and automatic intuition system, which can be overcome by the reasoning system. The present study examined an intriguing hypothesis, based on emerging evidence from neuroscience research, that the GF might be attributed to a weak affective but strong cognitive decision making mechanism. With data from a large sample of college students, we found that individuals' use of the GF strategy was positively correlated with their general intelligence and executive function, such as working memory and conflict resolution, but negatively correlated with their affective decision making capacities, as measured by the Iowa Gambling Task. Our result provides a novel insight into the mechanisms underlying the GF, which highlights the significant role of affective mechanisms in adaptive decision-making.

Anterior prefrontal cortex contributes to action selection through tracking of recent reward trends

The functions of prefrontal cortex remain enigmatic, especially for its anterior sectors, putatively ranging from planning to self-initiated behavior, social cognition, task switching, and memory. A predominant current theory regarding the most anterior sector, the frontopolar cortex (FPC), is that it is involved in exploring alternative courses of action, but the detailed causal mechanisms remain unknown. Here we investigated this issue using the lesion method, together with a novel model-based analysis. Eight patients with anterior prefrontal brain lesions including the FPC performed a four-armed bandit task known from neuroimaging studies to activate the FPC. Model-based analyses of learning demonstrated a selective deficit in the ability to extrapolate the most recent trend, despite an intact general ability to learn from past rewards. Whereas both brain-damaged and healthy controls used comparisons between the two most recent choice outcomes to infer trends that influenced their decision about the next choice, the group with anterior prefrontal lesions showed a complete absence of this component and instead based their choice entirely on the cumulative reward history. Given that the FPC is thought to be the most evolutionarily recent expansion of primate prefrontal cortex, we suggest that its function may reflect uniquely human adaptations to select and update models of reward contingency in dynamic environments.

Decision making in the reward and punishment variants of the iowa gambling task: evidence of "foresight" or "framing"?

Surface-level differences in the reward and punishment variants, specifically greater long-term decision making in the punishment variant of the Iowa Gambling Task (IGT) observed in previous studies led to the present comparison of long-term decision making in the two IGT variants (n = 320, male = 160). It was contended that risk aversion triggered by a positive frame of the reward variant and risk seeking triggered by a negative frame of the punishment variant appears as long-term decision making in the two IGT variants. Apart from the frame of the variant as a within-subjects factor (variant type: reward and punishment), the order in which the frame was triggered (order type: reward–punishment or punishment–reward), and the four types of instructions that delineated motivation toward reward from that of punishment (reward, punishment, reward and punishment, and no-hint) were hypothesized to have an effect on foresighted decision making in the IGT. As expected, long-term decision making differed across the two IGT variants suggesting that the frame of the variant has an effect on long-term decision making in the IGT (p < 0.001). The order in which a variant was presented, and the type of the instructions that were used both had an effect on long-term decision making in the two IGT variants (p < 0.05). A post hoc test suggested that the instructions that differentiated between reward and punishment resulted in greater foresight than the commonly used IGT instructions that fail to distinguish between reward and punishment. As observed in previous studies, there were more number of participants (60%) who showed greater foresight in the punishment variant than in the reward variant (p < 0.001). The results suggest that foresight in IGT decision making is sensitive to reward and punishment frame in an asymmetric manner, an observation that is aligned with the behavioral decision making framework. Benefits of integrating findings from behavioral studies in decision neuroscience are discussed, and a need to investigate cultural differences in the IGT studies is pointed out.

Lateral prefrontal cortex contributes to maladaptive decisions

Humans consistently make suboptimal decisions involving random events, yet the underlying neural mechanisms remain elusive. Using functional MRI and a matching pennies game that captured subjects' increasing tendency to predict the break of a streak as it continued [i.e., the "gambler's fallacy" (GF)], we found that a strong blood oxygen level-dependent response in the left lateral prefrontal cortex (LPFC) to the current outcome preceded the use of the GF strategy 10 s later. Furthermore, anodal transcranial direct current stimulation over the left LPFC, which enhances neuronal firing rates and cerebral excitability, increased the use of the GF strategy, and made the decisions more "sticky." These results reveal a causal role of the LPFC in implementing suboptimal decision strategy guided by false world models, especially when such strategy requires great resources for cognitive control.

Emotion regulation reduces loss aversion and decreases amygdala responses to losses

Emotion regulation strategies can alter behavioral and physiological responses to emotional stimuli and the neural correlates of those responses in regions such as the amygdala or striatum. The current study investigates the brain systems engaged when using an emotion regulation technique during financial decisions. In decision making, regulating emotion with reappraisal-focused strategies that encourage taking a different perspective has been shown to reduce loss aversion as observed both in choices and in the relative arousal responses to actual loss and gain outcomes. In the current study, we find using fMRI that behavioral loss aversion correlates with amygdala activity in response to losses relative to gains. Success in regulating loss aversion also correlates with the reduction in amygdala responses to losses but not to gains. Furthermore, across both decisions and outcomes, we find the reappraisal strategy increases baseline activity in dorsolateral and ventromedial prefrontal cortex and the striatum. The similarity of the neural circuitry observed to that seen in emotion regulation, despite divergent tasks, serves as further evidence for a role of emotion in decision making, and for the power of reappraisal to change assessments of value and thereby choices.

Decision-making based on emotional images

The emotional outcome of a choice affects subsequent decision making. While the relationship between decision making and emotion has attracted attention, studies on emotion and decision making have been independently developed. In this study, we investigated how the emotional valence of pictures, which was stochastically contingent on participants’ choices, influenced subsequent decision making. In contrast to traditional value-based decision-making studies that used money or food as a reward, the “reward value” of the decision outcome, which guided the update of value for each choice, is unknown beforehand. To estimate the reward value of emotional pictures from participants’ choice data, we used reinforcement learning models that have successfully been used in previous studies for modeling value-based decision making. Consequently, we found that the estimated reward value was asymmetric between positive and negative pictures. The negative reward value of negative pictures (relative to neutral pictures) was larger in magnitude than the positive reward value of positive pictures. This asymmetry was not observed in valence for an individual picture, which was rated by the participants regarding the emotion experienced upon viewing it. These results suggest that there may be a difference between experienced emotion and the effect of the experienced emotion on subsequent behavior. Our experimental and computational paradigm provides a novel way for quantifying how and what aspects of emotional events affect human behavior. The present study is a first step toward relating a large amount of knowledge in emotion science and in taking computational approaches to value-based decision making.

A somatic marker perspective of immoral and corrupt behavior

Individuals who engage in corrupt and immoral behavior are in some ways similar to individuals with psychopathy. Normal people refrain from engaging in such behaviors because they tie together the moral value of society and the risk of punishment when they violate social rules. What is it, then, that allows these immoral individuals to behave in this manner, and in some situations even to prosper? When there is a dysfunction of somatic markers, specific disadvantageous impairments in decision-making arise, as in moral judgment, but, paradoxically, under some circumstances, the damage can cause the patient to make optimal financial investment decisions. Interestingly, individuals with psychopathy, a personality disorder, share many of the same behavioral characteristics seen in VMPFC and amygdala lesion patients, suggesting that defective somatic markers may serve as a neural framework for explaining immoral and corrupt behaviors. While these sociopathic behaviors of sometimes famous and powerful individuals have long been discussed, primarily within the realm of social science and psychology, here we offer a neurocognitive perspective on the possible neural roots of immoral and corrupt behaviors.