Agnieszka Tymula

Adolescents’ risk-taking behavior is driven by tolerance to ambiguity

Adolescents engage in a wide range of risky behaviors that their older peers shun, and at an enormous cost. Despite being older, stronger, and healthier than children, adolescents face twice the risk of mortality and morbidity faced by their younger peers. Are adolescents really risk-seekers or does some richer underlying preference drive their love of the uncertain? To answer that question, we used standard experimental economic methods to assess the attitudes of 65 individuals ranging in age from 12 to 50 toward risk and ambiguity. Perhaps surprisingly, we found that adolescents were, if anything, more averse to clearly stated risks than their older peers. What distinguished adolescents was their willingness to accept ambiguous conditions—situations in which the likelihood of winning and losing is unknown. Though adults find ambiguous monetary lotteries undesirable, adolescents find them tolerable. This finding suggests that the higher level of risk-taking observed among adolescents may reflect a higher tolerance for the unknown. Biologically, such a tolerance may make sense, because it would allow young organisms to take better advantage of learning opportunities; it also suggests that policies that seek to inform adolescents of the risks, costs, and benefits of unexperienced dangerous behaviors may be effective and, when appropriate, could be used to complement policies that limit their experiences.

Like cognitive function, decision making across the life span shows profound age-related changes

Significance Although largely unstudied, behavioral changes in decision making across the life span have implications for problems associated with poor decision making at different life stages, such as careless driving in adolescents and disadvantageous medical or financial decision making in older adults. We examine age-based differences in individual decision-making characteristics—choice consistency, rationality, and preferences for known and unknown risks—in 12- to 90-y-olds. We found that even the healthiest of elders show profoundly compromised decision making, and that risk attitudes show systematic changes across the life span that have important policy implications. It has long been known that human cognitive function improves through young adulthood and then declines across the later life span. Here we examined how decision-making function changes across the life span by measuring risk and ambiguity attitudes in the gain and loss domains, as well as choice consistency, in an urban cohort ranging in age from 12 to 90 y. We identified several important age-related patterns in decision making under uncertainty: First, we found that healthy elders between the ages of 65 and 90 were strikingly inconsistent in their choices compared with younger subjects. Just as elders show profound declines in cognitive function, they also show profound declines in choice rationality compared with their younger peers. Second, we found that the widely documented phenomenon of ambiguity aversion is specific to the gain domain and does not occur in the loss domain, except for a slight effect in older adults. Finally, extending an earlier report by our group, we found that risk attitudes across the life span show an inverted U-shaped function; both elders and adolescents are more risk-averse than their midlife counterparts. Taken together, these characterizations of decision-making function across the life span in this urban cohort strengthen the conclusions of previous reports suggesting a profound impact of aging on cognitive function in this domain.

Thirst-dependent risk preferences in monkeys identify a primitive form of wealth

Significance We show that monkeys display similar risk preferences and rationality to those of humans, suggesting that despite concerns raised by earlier reports, they can serve as a model for human behavior. Standard experimental economic techniques have long allowed us to evaluate human risk attitudes, but we do not know how they relate to wealth levels, a critical variable in economic models. We find thirsty monkeys to be more risk averse and discuss implications for the role of wealth in human decision making. Experimental economic techniques have been widely used to evaluate human risk attitudes, but how these measured attitudes relate to overall individual wealth levels is unclear. Previous noneconomic work has addressed this uncertainty in animals by asking the following: (i) Do our close evolutionary relatives share both our risk attitudes and our degree of economic rationality? And (ii) how does the amount of food or water one holds (a nonpecuniary form of “wealth”) alter risk attitudes in these choosers? Unfortunately, existing noneconomic studies have provided conflicting insights from an economic point of view. We therefore used standard techniques from human experimental economics to measure monkey risk attitudes for water rewards as a function of blood osmolality (an objective measure of how much water the subjects possess). Early in training, monkeys behaved randomly, consistently violating first-order stochastic dominance and monotonicity. After training, they behaved like human choosers—technically consistent in their choices and weakly risk averse (i.e., risk averse or risk neutral on average)—suggesting that well-trained monkeys can serve as a model for human choice behavior. As with attitudes about money in humans, these risk attitudes were strongly wealth dependent; as the animals became “poorer,” risk aversion increased, a finding incompatible with some models of wealth and risk in human decision making.

Neuroanatomy Predicts Individual Risk Attitudes

Over the course of the last decade a multitude of studies have investigated the relationship between neural activations and individual human decision-making. Here we asked whether the anatomical features of individual human brains could be used to predict the fundamental preferences of human choosers. To that end, we quantified the risk attitudes of human decision-makers using standard economic tools and quantified the gray matter cortical volume in all brain areas using standard neurobiological tools. Our whole-brain analysis revealed that the gray matter volume of a region in the right posterior parietal cortex was significantly predictive of individual risk attitudes. Participants with higher gray matter volume in this region exhibited less risk aversion. To test the robustness of this finding we examined a second group of participants and used econometric tools to test the ex ante hypothesis that gray matter volume in this area predicts individual risk attitudes. Our finding was confirmed in this second group. Our results, while being silent about causal relationships, identify what might be considered the first stable biomarker for financial risk-attitude. If these results, gathered in a population of midlife northeast American adults, hold in the general population, they will provide constraints on the possible neural mechanisms underlying risk attitudes. The results will also provide a simple measurement of risk attitudes that could be easily extracted from abundance of existing medical brain scans, and could potentially provide a characteristic distribution of these attitudes for policy makers.

Free choice shapes normalized value signals in medial orbitofrontal cortex

Normalization is a common cortical computation widely observed in sensory perception, but its importance in perception of reward value and decision making remains largely unknown. We examined (1) whether normalized value signals occur in the orbitofrontal cortex (OFC) and (2) whether changes in behavioral task context influence the normalized representation of value. We record medial OFC (mOFC) single neuron activity in awake-behaving monkeys during a reward-guided lottery task. mOFC neurons signal the relative values of options via a divisive normalization function when animals freely choose between alternatives. The normalization model, however, performed poorly in a variant of the task where only one of the two possible choice options yields a reward and the other was certain not to yield a reward (so called: “forced choice”). The existence of such context-specific value normalization may suggest that the mOFC contributes valuation signals critical for economic decision making when meaningful alternative options are available.Neurons in prefrontal areas including the medial orbitofrontal cortex (mOFC) represent the relative reward value of choices. Here the authors report that mOFC neurons implement divisive normalization to encode the relative values of lottery options only when the decision involves free choice.

Context-dependency in valuation.

In the last few years, work in the nascent field of neuroeconomics has advanced understanding of the brain systems involved in value-based decision making. An important modulator of valuation processes is the specific context a decision maker is facing during choice. Recently, neuroeconomics has made great progress in understanding, on both the brain and behavioral level, how context-dependent perception affects valuation and choice. Here we describe how context-sensitive value coding accounts for choice set effects, differential perceptions of gains and losses, and expectancy effects of external (economic) signals.

The Reduction of Ventrolateral Prefrontal Cortex Gray Matter Volume Correlates with Loss of Economic Rationality in Aging

The population of people above 65 years old continues to grow, and there is mounting evidence that as humans age they are more likely to make errors. However, the specific effect of neuroanatomical aging on the efficiency of economic decision-making is poorly understood. We used whole-brain voxel-based morphometry analysis to determine where reduction of gray matter volume in healthy female and male adults over the age of 65 years correlates with a classic measure of economic irrationality: violations of the Generalized Axiom of Revealed Preference. All participants were functionally normal with Mini-Mental State Examination scores ranging between 26 and 30. While our elders showed the previously reported decline in rationality compared with younger subjects, chronological age per se did not correlate with rationality measures within our population of elders. Instead, reduction of gray matter density in ventrolateral prefrontal cortex correlates tightly with irrational behavior. Interestingly, using a large fMRI sample and meta-analytic tool with Neurosynth, we found that this brain area shows strong coactivation patterns with nearly all of the value-associated regions identified in previous studies. These findings point toward a neuroanatomic locus for economic rationality in the aging brain and highlight the importance of understanding both anatomy and function in the study of aging, cognition, and decision-making. SIGNIFICANCE STATEMENT Age is a crucial factor in decision-making, with older individuals making more errors in choices. Using whole-brain voxel-based morphometry analysis, we found that reduction of gray matter density in ventrolateral prefrontal cortex correlates with economic irrationality: reduced gray matter volume in this area correlates with the frequency and severity of violations of the Generalized Axiom of Revealed Preference. Furthermore, this brain area strongly coactivates with other reward-associated regions identified with Neurosynth. These findings point toward a role for neuroscientific discoveries in shaping long-standing economic views of decision-making.

Let the Sunshine In? The Effects of Luminance on Economic Preferences, Choice Consistency and Dominance Violations

Weather, in particular the intensity and duration of sunshine (luminance), has been shown to significantly affect financial markets. Yet, because of the complexity of market interactions we do not know how human behavior is affected by luminance in a way that could inform theoretical choice models. In this paper, we use data from a field study using an incentive-compatible, decision task conducted daily over a period of two years and from the US Earth System Research Laboratory luminance sensor to investigate the impact of luminance on risk preferences, ambiguity preferences, choice consistency and dominance violations. We find that luminance levels affect all of these. Age and gender influence the strength of some of these effects.

An Experimental Comparison of Risky and Diskless Choice – Limitations of Prospect Theory and Expected Utility Theory

Prospect theory, widely used descriptively for decisions under both risk and certainty, presumes concave utility over “gains�? and convex utility over “losses�?; a pattern widely seen in lottery tasks. Although such gain-loss asymmetry is also widely used to model riskless choices, limited empirical evidence supports this use. In incentive-compatible experiments we find that in riskless choice gain-loss asymmetries are not observed as predicted by prospect theory even while in the same participants gain-loss asymmetries are observed under risk. Our results imply that utility functions under conditions of certainty can be more closely approximated using neoclassical rather than prospect theoretic preferences.

Watched by a Stranger: Influence of Observation on Individual Decision Making Under Risk and Ambiguity

Young adults often make bad choices when their peers are present, due to reasons not fully understood. In this paper, using an incentive compatible experiment, we investigate whether: (1) young people’s willingness to accept known and unknown risks changes in the presence of a person of the same age compared to in private and (2) whether the same preferences are affected by having observed a peer’s decisions. We find that contrary to common wisdom young adults do not gamble more when observed by peers, instead they become more ambiguity averse when observed.