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Title: Neural correlates of basic decision parameters : expected value, risk, risk aversion and utility
Author: Christopoulos, G.
Awarding Body: University of Cambridge
Current Institution: University of Cambridge
Date of Award: 2008
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According to economic decision theory, the basic decision parameters involved in the evaluation of a risky option are its expected value, the objective (statistical) risk and the subjective risk perception. Here, the use of functional magnetic resonance imaging shows increasing blood-oxygenation-level-dependent (BOLD) responses with increasing expected value in the ventral striatum and with increasing objective, risk-attitude independent risk in the dorsal anterior cingulated (dACC). By contrast, risk-related responses in inferior frontal gyrus (IFG) correlate significantly with individual risk aversion (subjective risk). Importantly, all these responses are independent from pure preferences (utility). Risk can be further defined in either absolute or relative terms. Formally, absolute risk refers to the deviation from the mean, whereas relative risk is the deviation from the mean normalised by the (average) change in total wealth. Again, encoding of objective risk by dACC and of subjective risk by IFG was found, but only for absolute risk. On the contrary, relative risk aversion was encoded by medial orbitofrontal cortex (mOFC). By integrating the decision parameters, the agent attaches a subjective value (or utility) to each option: subsequently, a choice is based on comparing the utilities of each alternative. By definition, between two options, the one with higher expected value has higher utility, ceteris paribus; in addition, higher risk aversion means lower utility for the same increase in risk. The response of an area in lateral prefrontal cortex was found, in a number of separate tests, to concurrently satisfy both conditions for utility encoding. The present results emphasize the importance of adopting a parametric approach (isolating the basic decision parameters and incorporating formal behavioural measurements of risk-attitudes) in the analysis of the neural basis of decision making under risk.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available