Topic 8-decision making

• Expected value (EV): average outcome if a scenario is repeated many times. Calculated using probabilities and values of possible outcomes
• Prospect theory:

  • people do not make decisions based on expected values, probabilities, and absolute outcomes
  • people make decisions based on subjective utility, decision weights, and relative outcomes
• Subjective utility:

  • people transform objective value into subjective utility
  • Diminishing marginal utility
  • subjective utility increases more slowly than objective value, especially at large values
• Loss aversion: losses loom larger than gains
• Utility function = diminishing marginal utility + loss aversion
• Decision weight:

  • people transform objective probability into subjective decision weights
  • small probabilities are overweighted
  • large probabilities are underweighted
• Framing effect: people make decisions based on gains and losses relative to a point of reference, not based on absolute outcomes

  • changing the way a question is asked to create a different point of reference leads to different valuations and thus different choices
• Learning driven by rewards:

  • activity of midbrain dopamine neurons is related to reward
  • but dopamine neurons do more than simply report occurence of reward:
  • they code deviations from predictions about time and magnitude of reward
• Reward prediction error: The difference between the actual reward and the predicted reward
• Dopamine and reinforcement learning:

  • we are continuously predicting expected future rewards
  • we take actions to maximize future rewards
  • when we receive information that violates our expectations, it generates a reward prediction error
• Reinforcement learning and addiction:

  • opioids physiologically trigger the release of dopamine
  • this is misinterpreted as a reward prediction error signal
  • thus, opioids, hijack the reinforcement learning mechanism
• Ventromedial prefrontal cortex patients:

  • perform normally on IQ tests
  • seem to make poor decisions in life
• Iowa gambling task and VMPFC patients:

  • conceptual knowledge alone did not lead to good decision making
  • predictions of expected emotions were necessary for good decision making
  • epected emotions preceded concptual understanding
  • patients with damage to VMPFC could not generate expected emotions
  • immediate reward > long-term outcomes (temporal discounting)
• Prefrontal cortex functions:

  • maintenance and updating of goals
  • inhibition of prepotent actions
  • shifting between rules, sets, and tasks
  • monitoring and adjusting performance
  • integrating multiple sources of value
• Rostral/caudal: abstraction

  • Rostral
  • complex, abstract, long timeframe
  • Caudal
  • simple, concrete, short timeframe
• Ventral/dorsal: what vs where

  • Ventral
  • what, why, meaning oriented
  • Dorsal
  • where, how, action oriented
• Medial/lateral: emotion vs cognition

  • Medial
  • hot/affective
  • value-based
  • internal/body-oriented
  • Lateral
  • cold/cognitive
  • feature-based
  • external/environment-oriented