Table of Contents

Spatiotemporal Brain Signatures of Risk and Reward

Anjali Nursimulu, Ecole Polytechnique Fédérale de Lausanne
Ulrike Toepel, Independent
Peter Bossaerts, California Institute of Technology, Ecole Polytechnique Fédérale de Lausanne - Swiss Finance Institute, Ecole Polytechnique Fédérale de Lausanne
Micah M Murray, University Hospital Center and University of Lausanne, EEG Brain Mapping Core


NEUROECONOMICS eJOURNAL

"Spatiotemporal Brain Signatures of Risk and Reward" Free Download

ANJALI NURSIMULU, Ecole Polytechnique Fédérale de Lausanne
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ULRIKE TOEPEL, Independent
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PETER BOSSAERTS, California Institute of Technology, Ecole Polytechnique Fédérale de Lausanne - Swiss Finance Institute, Ecole Polytechnique Fédérale de Lausanne
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MICAH M MURRAY, University Hospital Center and University of Lausanne, EEG Brain Mapping Core
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Rational economics and finance surmise that choices decree from a conscious arbitration between alternatives based on decision-theoretically computed values. Implicit in the computation of these option values are the perception and integration of different mathematical components (e.g., magnitude, valence, expected value and risk) of monetary rewards. Functional neuroimaging studies have consistently revealed that spatially distributed brain areas encode such mathematical moments that are the cornerstones of modern financial theory. However, the dynamics of the neurophysiological mechanisms whereby these computational parameters influence behavior remains poorly understood. To unravel the spatio-temporal electrophysiological (EEG) correlates of these computational statistics, we devised a novel experimental approach with sequentially presented information. Subjects decided whether or not to buy into a series of independent gambles while 128-channels EEG was acquired. Within a parallel factor (PARAFAC) analytical framework, constrained to take into account the physiological features of EEG signals and financial theoretic structure in the behavioral data, we identified for the first time and within a single experiment the EEG markers of mathematical moments and action values. Specifically, risk-related features - variance and skewness - are extracted within the first 350ms post-stimulus onset. EEG modulations predictive of choice and sensitive to expected value were observed 200ms prior to overt/registered choice. Distinct topographic maps indicate that the different processes are subserved by distinct networks of intracranial sources; the associated time courses occur at times in parallel albeit peaking at different latencies. Importantly, unlike option value computation and decision-making, information retrieval and choice implementation have time-consistent EEG signatures across subjects.

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About this eJournal

This eJournal distributes working and accepted paper abstracts focused on research where economic outcomes are the product of many individual decisions, constrained by scarcity, and equilibrium forces that simultaneously shape a person's social networks and the institutionally defined rules of the game. Decisions are made by computations in the brain which produce action-choices that directly affect the homeostatic wellbeing of the individual and choices that indirectly change wellbeing by changing an individual's future constraints, the scope of their social networks, and their message sending rights within the institutions they participate. Neuroeconomics broadly speaking is interested in the study of these computations and the resulting choices they produce. This includes experiments that attempt to understand the mechanisms of neuronal computations that produce action-choices, theories which predict how neuronal computations in socio-economic environments produce decisions, outcomes and wellbeing, and policy which use our understanding of neuoroeconomic behavior to either build or defend better solutions to societal problems.

Editors: Michael C. Jensen, Harvard University, and Kevin A. McCabe, George Mason University

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Social Science Electronic Publishing (SSEP), Inc., Harvard Business School, National Bureau of Economic Research (NBER), European Corporate Governance Institute (ECGI)
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Neuroeconomics eJournal

ANDREW W. LO
Harris & Harris Group Professor, Massachusetts Institute of Technology (MIT) - Sloan School of Management, National Bureau of Economic Research (NBER)

P. READ MONTAGUE
Professor, Baylor University - Department of Neuroscience

VERNON L. SMITH
Professor of Economics and Law, Chapman University - Economic Science Institute, Chapman University School of Law