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Neural Response to Reward Anticipation under Risk Is Nonlinear in Probabilities

Hsu, Ming and Krajbich, Ian and Zhao, Cheng and Camerer, Colin F. (2009) Neural Response to Reward Anticipation under Risk Is Nonlinear in Probabilities. Journal of Neuroscience, 29 (7). pp. 2231-2237. ISSN 0270-6474. PMCID PMC6666337. doi:10.1523/JNEUROSCI.5296-08.2009.

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A widely observed phenomenon in decision making under risk is the apparent overweighting of unlikely events and the underweighting of nearly certain events. This violates standard assumptions in expected utility theory, which requires that expected utility be linear (objective) in probabilities. Models such as prospect theory have relaxed this assumption and introduced the notion of a "probability weighting function," which captures the key properties found in experimental data. This study reports functional magnetic resonance imaging (fMRI) data that neural response to expected reward is nonlinear in probabilities. Specifically, we found that activity in the striatum during valuation of monetary gambles are nonlinear in probabilities in the pattern predicted by prospect theory, suggesting that probability distortion is reflected at the level of the reward encoding process. The degree of nonlinearity reflected in individual subjects' decisions is also correlated with striatal activity across subjects. Our results shed light on the neural mechanisms of reward processing, and have implications for future neuroscientific studies of decision making involving extreme tails of the distribution, where probability weighting provides an explanation for commonly observed behavioral anomalies.

Item Type:Article
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URLURL TypeDescription CentralArticle
Camerer, Colin F.0000-0003-4049-1871
Additional Information:© 2009 Society for Neuroscience. Received Nov. 3, 2008; revised Dec. 15, 2008; accepted Jan. 5, 2009. This work was supported by a Gordon and Betty Moore Foundation grant and a Human Frontier Science Program grant to C.F.C. We thank P. Bossaerts, K. Friston, A. Healy, and R. Poldrack for comments.
Funding AgencyGrant Number
Gordon and Betty Moore FoundationUNSPECIFIED
Human Frontier Science ProgramUNSPECIFIED
Subject Keywords:probability weighting; prospect theory; expected utility theory; fMRI; decision making; reward
Issue or Number:7
PubMed Central ID:PMC6666337
Record Number:CaltechAUTHORS:20090904-090613594
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:15600
Deposited By: George Porter
Deposited On:08 Sep 2009 17:40
Last Modified:04 Mar 2022 17:02

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