RT Journal Article
SR Electronic
T1 Neural Response to Reward Anticipation under Risk Is Nonlinear in Probabilities
JF The Journal of Neuroscience
JO J. Neurosci.
FD Society for Neuroscience
SP 2231
OP 2237
DO 10.1523/JNEUROSCI.5296-08.2009
VO 29
IS 7
A1 Hsu, Ming
A1 Krajbich, Ian
A1 Zhao, Chen
A1 Camerer, Colin F.
YR 2009
UL http://www.jneurosci.org/content/29/7/2231.abstract
AB A widely observed phenomenon in decision making under risk is the apparent overweighting of unlikely events and the underweighting of nearly certain events. This violates standard assumptions in expected utility theory, which requires that expected utility be linear (objective) in probabilities. Models such as prospect theory have relaxed this assumption and introduced the notion of a “probability weighting function,” which captures the key properties found in experimental data. This study reports functional magnetic resonance imaging (fMRI) data that neural response to expected reward is nonlinear in probabilities. Specifically, we found that activity in the striatum during valuation of monetary gambles are nonlinear in probabilities in the pattern predicted by prospect theory, suggesting that probability distortion is reflected at the level of the reward encoding process. The degree of nonlinearity reflected in individual subjects' decisions is also correlated with striatal activity across subjects. Our results shed light on the neural mechanisms of reward processing, and have implications for future neuroscientific studies of decision making involving extreme tails of the distribution, where probability weighting provides an explanation for commonly observed behavioral anomalies.