The Neurobiological Foundations of Valuation in Human Decision Making under Uncertainty
Bossaerts P, Preuschoff K & Hsu M. In Paul Glimcher, Colin Camerer, Ernst Fehr, and Russell Poldrack, eds. Neuroeconomics: Decision Making and the Brain. Amsterdam, Elsevier, 2008.First Paragraph
The goal of this chapter is to review recent neurobiological evidence to improve our understanding of human valuation under uncertainty. Although ultimately interested in human behavior, we will borrow from studies of animals with related brain structures, namely, non-human primates. Specifically, we wish to explore how valuation is accomplished. As we shall see, the evidence rejects a pure “retrieval from memory” model; instead, values are computed. This raises the issue: what computational model(s) are being used? Since actual choice can be summarized in terms of a single-dimensional utility index as in expected utility or prospect theory, we want to know how such an index is computed, and to understand the effect of perceptual biases on this computation, as well as the role of emotions. How does the computational model generate the risk aversion that we may see in choices? Or, in ambiguous situations, how is ambiguity aversion revealed in choices (Hsu et al., 2005; Huettel, et al. 2006; Bali et al., 2008) and what model underlies it – for example, alpha-maxmin preferences (Ghirardato et al., 2004), anticipated regret (Segal, 1987), or some other?