12: Decision Making

1. 12: Decision Making Cognitive Neuroscience David Eagleman Jonathan Downar

2. Chapter Outline • How Do We Decide What to Do? • The Predictably Irrational Homo sapiens • Where Do Our Irrational Decisions Come From? • How the Brain Decides • The Common Currency of Subjective Value • A Hierarchy of Internally Guided Decision Making • Modulators of Decision Making

3. How Do We Decide What to Do? • The Scorpion and the Frog • The Search for a “Physics” of Human Decisions • Homo economicus and Rational Choice Theory

4. The Scorpion and the Frog • We make irrational decisions even though we know they are poor choices. • Recently, neuroscience has started to study decision making.

5. The Search for a “Physics” of Human Decisions • Bentham tried to develop an equivalent to Newton’s Laws of Motion for human decision making. • All actions had a “utility” or amount of happiness the action would bring to a person. • Decision making was just the act of calculating the greatest utility.

6. The Search for a “Physics” of Human Decisions • “Felicific Calculus” • Measured pleasure and pain in terms of intensity and duration. • Incorporated the probability that the event would occur. • Likelihood that it would be followed by more of the same or the opposite. • Estimated the number of people affected. • Rapidly became incalculable.

7. The Search for a “Physics” of Human Decisions Figure 12.3 Newton’s laws of motion and Bentham’s felicific calculus. Both Newton and Bentham adopted a quantitative, scientific approach to better understand the properties of their subject. (a) For Newton, that subject was the movement of planets. (b) For Bentham, it was pleasure.

8. Homo economicus and Rational Choice Theory • Modern economists still talk about the utility of a behavior. • Homo economicus is a theoretical person who always makes the same rational decisions and maximizes utility.

9. The Predictably Irrational Homo sapiens • Homo sapiens versus Homo economicus • Confused by Uncertainty • The Framing Effect and the Endowment Effect • The Illusory Value of Procrastination

10. Homo sapiens versus Homo economicus • Homo sapiens behaves differently from Homo economicus. • Behavioral economics is the field that studies human decision making using empirical methods.

11. Homo sapiens versus Homo economicus • H. sapiens has relative preferences, which shift depending on the objects that are being compared. • H. economicus has absolute preferences, never changing regardless of the comparison. • We often get overwhelmed when there are too many choices, deciding not to decide.

12. Homo sapiens versus Homo economicus If you are trying to decide between the sedan and the SUV, the mere presence of an inferior SUV makes the new SUV seem like a better deal and more desirable.

13. Confused by Uncertainty • When confronted with a gamble with a moderate chance of success, people tend to be risk averse. • When there is a small chance of success, people tend to be risk seeking. • Framing the question so that you consider losses rather than gains makes people risk averse.

14. Confused by Uncertainty • Prospect theory describes the inconsistent behavior of H. sapiens. • A utility curve describes how people assign value to options with the prospect of a gain or loss. • The curve has a different shape for gains and losses. • There is a discontinuity at the middle of the curve.

15. Confused by Uncertainty Figure 12.5 The utility curve under “prospect theory.” This function was developed by Kahneman and Tversky using behavioral data from experimental studies in which people choose among different options. Note the shape of the function, which looks like two different curves stuck together at the Y-axis. The different shapes of the curves suggest that we may use different mechanisms for evaluating gains versus losses.

16. The Framing Effect and the Endowment Effect • People can be manipulated into picking a particular option, depending on how the question is set up, or framed. • If the question is framed in terms of gains, people will chose one solution. If framed in terms of loses, they will chose the other. • Framing effects are common in real-life decision making.

17. The Framing Effect and the Endowment Effect Figure 12.6 Framing effects in medical decision making. In the first scenario, the emphasis is on the number of lives saved. With this frame, the majority of subjects selected the first treatment option, which was to save 200 people. In the second scenario, the emphasis is on the lives lost. With this frame, the majority of subjects selected the second treatment option, which was to take a two-thirds chance that all the patients would die.

18. The Framing Effect and the Endowment Effect • In the endowment effect, people demand a higher price to sell an object that they would pay for it. • Once they own it, it is endowed with greater value.

19. The Illusory Value of Procrastination • Rewards that occur in the future have some risk of not being collected, so are discounted. • Delay discounting reduces the value of the reward as it is payable further in the future to reflect this risk. • The delay discounting curve is quasi-hyperbolic.

20. The Illusory Value of Procrastination Figure 12.7 Hyperbolic and exponential discount curves. These graphs show the standard hyperbolic (orange line) and exponential (green line) discount curves. Both show that something that has high value in the near future rapidly drops off in value. Experimental results identify a curve that is similar to the hyperbolic curve shown here.

21. The Illusory Value of Procrastination Figure 12.8. The relative size of a dime and quarter vary, depending on how far you hold them from your eye. If you hold a quarter two inches behind a dime, the size difference is clear when they are held at arm’s length. But, as you bring them closer to your eye, the dime appears bigger than the quarter.

22. Where Do Our Irrational Decisions Come From? • Decision Making in Other Species • Do Irrational Decisions Come from Irrational People? • One Brain, Two Systems

23. Decision Making in Other Species • Ultimately, decisions are the result from the nervous system, which was shaped by evolution. • The endowment effect is observed in other species. • Bonobos act like humans when evaluating risk, but chimpanzees do not.

24. Do Irrational Decisions Come from Irrational People? • One idea is that our poor decisions occur because we have a defective brain. • According to the attribution effect, we explain our own behavior by the situation, but other’s behavior is explained by their character. • The defective brain explanation is not supported by experimental evidence.

25. One Brain, Two Systems • Perhaps we have two decisional systems. • System 1 (Intuitive) • Works at a non-conscious, intuitive level. • Uses parallel processing. • Independent of intelligence and attention. • System 2 (Rational) • Works at a conscious, explicit level. • Uses sequential processing. • Depends on intelligence and attention.

26. How the Brain Decides • The Neural Mechanisms of Delay Discounting • Neural Mechanisms of Decisions under Risk • The Neural Basis of the Endowment Effect • The Neural Basis of the Framing Effect

27. The Neural Mechanisms of Delay Discounting • Decisions in the distant future are made rationally, but near-term decisions are made irrationally. • Different neural systems are active for decisions in the distant future vs. for decisions in the near term.

28. The Neural Mechanisms of Delay Discounting • Areas involved in all decisions, regardless of the delay, include • Dorsolateral prefrontal cortex • Intraparietal cortex • Supplementary motor area • Presupplementary motor area • Ventrolateral orbitofrontal cortex • Lateral orbitofrontal cortex

29. The Neural Mechanisms of Delay Discounting Figure 12.12 Brain regions activated during choices among immediate and delayed rewards, from the study of McClure, Laibson, Loewenstein, & Cohen, 2004. (a) More lateral regions, including the dorsolateral prefrontal cortex and intraparietal cortex, were active for all choices, regardless of the delay. (b) More medial regions, including the medial prefrontal cortex, medial orbitofrontal cortex, and ventral striatum, were more active when there was no delay between the choice and the reward.

30. The Neural Mechanisms of Delay Discounting • Areas involved when there was an immediate reward included medial orbitofrontal cortex, ventral striatum, and left posterior hippocampus. • When lateral areas were active, decision making resembled H. economicus. • When medial areas were active, decision making resembled H. sapiens.

31. The Neural Mechanisms of Delay Discounting • Lateral prefrontal cortex is important for suppressing irrational decisions. • Using TMS to suppress the left lateral prefrontal cortex led to more impulsive decision making.

32. Neural Mechanisms of Decisions under Risk • Different brain regions are associated with risk-seeking and risk-avoiding behaviors. • Risk taking behaviors are associated with activity in the ventral striatum and the ventromedial prefrontal cortex. • Risk aversion behaviors are associated with increased activity in the anterior insula.

33. Neural Mechanisms of Decisions under Risk Figure 12.13 Neural mechanisms for evaluating uncertain risks and uncertain rewards. (a) The cortico-striatal loop through the nucleus accumbens and ventromedial prefrontal cortex represents the reward value of a stimulus and is more active for higher-value rewards. (b) The amygdala and the anterior insula are more active for more aversive stimuli.

34. Neural Mechanisms of Decisions under Risk • Patients with damage to the ventromedial prefrontal cortex or the insula were more likely to gamble. • The insula seems to be associated with an aversion to taking risks.

35. Neural Mechanisms of Decisions under Risk Figure 12.14 Focal brain lesions can impair decision making under risk. (a) Patients with lesions of the ventromedial prefrontal cortex (shaded) but an intact insula, gamble higher amounts than controls; however, they are still sensitive to the level of risk when placing a bet. (b) Patients who have lesions of the insula (shaded) but an intact ventromedial prefrontal cortex, ignore the level of risk when placing a bet; they do not show “loss aversion” in risky decision making.

36. The Neural Basis of the Endowment Effect • The calculation of the value of the reward seems to involve the ventral striatum and the ventromedial prefrontal cortex. • Loss aversion seems to involve the insula. • The size of the endowment effect is correlated with the level of activity in the right insula.

37. The Neural Basis of the Endowment Effect Figure 12.15. Activity in medial areas, including the medial prefrontal cortex, is associated with choosing whether to buy or sell an item for a particular price.

38. The Neural Basis of the Framing Effect • The amygdala was more active during risky options when the question was framed as a gain. • It was less active during risky options when the question was framed as a loss. • Individuals less susceptible to framing effects had more activity in ventromedial prefrontal cortex and orbitofrontal cortex.

39. The Neural Basis of the Framing Effect Figure 12.16 The neural basis of the framing effect in risky decision making. (a) Subjects chose the certain option when the decision was framed in terms of gains; in this frame, the amygdala was more active for risky options. Subjects usually switched to become risk seeking when the decision was framed in terms of losses; in this frame, the amygdala was more active for certain options. (b) In some cases, subjects overrode their usual tendencies, choosing the risky option for gains or the certain option for losses; in these instances, activation appeared in the dorsomedial prefrontal cortex. (c) Some individuals were less susceptible to framing effects and assigned value to the options fairly similarly, regardless of whether they were presented as gains or losses; activation appeared in the ventromedial prefrontal cortex for these individuals exhibiting higher “rationality.”

40. The Common Currency of Subjective Value • Comparing Apples to Oranges • A Consistent Neural Basis for Subjective Value • Evaluation and the Orbitofrontal Cortex • One Currency, but Many Markets

41. Comparing Apples to Oranges • The brain likely uses some form of common currency when comparing two different options. • In the axiom of revealed preferences, subjects select one of two options, thereby revealing their preferences.

42. Comparing Apples to Oranges Figure 12.17 The axiom of revealed preferences.To learn how people assign subjective value to different options, we can offer a choice between two options, and the choice will “reveal” a person’s preference. For example, we could reveal the subjective value of a coffee break by offering a choice to forego the break in order to receive a sum of money. At what point would you prefer the sum of money over the coffee break?

43. A Consistent Neural Basis for Subjective Value • In the intertemporal choice paradigm, subjects assign values to rewards that occur at different times. • Medial areas are more active when choosing rewards that are smaller and occur sooner. • Lateral areas are more involved in when choosing rewards that are larger and later.

44. A Consistent Neural Basis for Subjective Value • The medial precuneus, posterior cingulate cortex, and the nucleus accumbens change their activity based on when the reward occurs. • Activity resembles quasi-hyperbolic curve. • The brain areas that track risky rewards are distinct from those that track delayed rewards.

45. A Consistent Neural Basis for Subjective Value Figure 12.18 Brain regions representing the subjective value of a delayed monetary reward. (a) The subjective value of delayed rewards falls over time according to a hyperbolic function; more impulsive individuals have steeper curves, while more patient individuals have more shallow curves. (b) A specific network of regions, including the medial prefrontal cortex, posterior cingulate cortex, and ventral striatum, show activity that reflects the subjective value of delayed monetary rewards.

46. Evaluation and the Orbitofrontal Cortex • The orbitofrontal cortex receives input from all sensory modalities. • The amygdala receives sensory input and projects to the orbitofrontal cortex. • The orbitofrontal cortex projects widely throughout the brain. • The orbitofrontal cortex assembles information and assigns subjective value.

47. Evaluation and the Orbitofrontal Cortex Figure 12.19 Inputs to the orbitofrontal cortex. The orbitofrontal cortex receives input from the external senses (vision, hearing, touch, smell, and taste) as well as the internal state of the body, via the insula. By obtaining information about the properties of an external stimulus (watery, sugary, chilly, friendly, hostile) and comparing this information to the body’s current internal state, the orbitofrontal cortex decides how valuable the stimulus is to the organism at any given moment.

48. One Currency, but Many Markets • Dopamine is important for computing reward value. • There may be many places to compare the values of different options.

49. A Hierarchy of Internally Guided Decision Making • Internally and Externally Guided Decision Making • Values into Goals • Goals into Plans • Plans into Behavior and Action

50. Internally and Externally Guided Decision Making • Lateral areas, including motor and lateral prefrontal areas, use external sensory information to predict future events. • Such predictions are considered cognition. • Decision making is typically associated with internally-guided behaviors. • Conation refers to the internal processes that guide voluntary behaviors.