Neuroeconomics of risky decisions: From variables to strategies


Book Section

© The International Association for the study of Attention and Performance, 2011. All rights reserved. We make a variety of decisions throughout our lives. Some decisions involve outcomes whose values can be readily compared, especially when those outcomes are simple, immediate, and familiar. Other decisions involve imperfect knowledge about their potential consequences. Understanding the choice process when consequences are uncertain - often called the study of decision making under risk - remains a key goal of behavioural economics, cognitive psychology, and now neuroscience. An ongoing challenge, however, lies in the substantial individual differences in how people approach risky decisions. Using a novel choice paradigm, this chapter demonstrates that people vary in whether they adopt compensatory rules (i.e., tradeoffs between decision variables) or noncompensatory rules (i.e., a simplification of the choice problem) in economic decision making. The chapter shows that distinct neural mechanisms support variability in choices and variability in strategic preferences. Specifically, compensatory choices are associated with activation in the anterior insula and the ventromedial prefrontal cortex, while noncompensatory choices are associated with increased activation in the dorsolateral prefrontal cortex and the posterior parietal cortex. The dorsomedial prefrontal cortex shaped decision making at a strategic level through its functional connectivity with these regions. Individual-difference analyses are a key direction through which neuroscience can influence models of choice behaviour.

Full Text

Duke Authors

Cited Authors

  • Venkatraman, V; Payne, JW; Huettel, SA

Published Date

  • May 1, 2011

Book Title

  • Decision Making, Affect, and Learning: Attention and Performance XXIII

International Standard Book Number 13 (ISBN-13)

  • 9780199600434

Digital Object Identifier (DOI)

  • 10.1093/acprof:oso/9780199600434.003.0007

Citation Source

  • Scopus