Jake Szczypek
Reading Response #3
4/1/07
Neuroeconomics and Decision-Making
This week’s readings focused on the field of neuroeconomics and how it uses both psychological and economical methodologies in order to learn more about the human brain in relation to decision-making. After having read about the somatic marker hypothesis in Damasio (1994), the additional articles were quite fascinating to me, as I have no experience in economics. What I found most interesting, however, was the discussion over emotional and cognitive processes and how they each play a major role in decision-making.
According to Bechara, et al.’s The Iowa Gambling Task and The Somatic Marker Hypothesis (2005), the Iowa Gambling Task (IGT) uses skin conductance responses (SCRs) to test for “emotion-related marker signals” released through the sweat glands (pp.160). Damasio (1994) also uses SCRs in his experiments with Elliot, and both of these readings come to a similar conclusion regarding emotions and their effects on decision-making. In the IGT, individuals with damage to their ventromedial prefrontal cortex (VMPC) were unable to generate SCRs prior to having conscious knowledge of the IGT. Accordingly, they continued to choose the “bad deck” once they obtained conscious knowledge of the task at hand because of, what appears to be, a lack of emotion processes from the VMPC. Normal participants, however, generated SCRs before having conscious knowledge of the situation and thus demonstrated a preference for the “good decks” early on. Having a functional VMPC, which generated emotional responses to both decks, allows for more advantageous decision-making. These results indicate that cognitive assessment is not the only factor playing a role in our choices. It would appear that emotions play a role in informing our decision-making process in ways that don’t seem to agree with cognitive rationale. Lehrer’s Driven to Market (2006) goes even further to state that there are two processes involved in decision-making: one being a cognitive process and one being an emotion process. However, while economists seem to view this as a productive description of the decision-making process, psychologists tend to disagree. The influence of emotions on rationality is a much more integrated process that can’t be split into a simple “dual-process model” (Lehrer, 2006, pp.503).
As much as I want to agree with the dual-process model, I also believe that it’s much more complicated than two separate systems “fighting” for control. The dual-process model seems like a great way of looking at decision-making, but according to Grimes’ To Trust is Human (2003), the hormone oxytocin has been shown to release “as a response to the social signal of trust” (pp.2). And since oxytocin receptors are located in the hypothalamus and the limbic system (both connecting to areas in the brain involved in memory) the decision to trust another person cannot simply be an “argument” between cognition and emotion. Multiple areas of the brain are activated, weighing memories, rationality, and emotions. It can’t be this dichotomous dual-process some are suggesting, can it? And why do emotions always have to be considered irrational, as if cognition is the antithesis of emotion? Clearly that’s not always the case.
There seems to be evidence in this literature that supports the dual-process, but there also seems to be great uncertainty over whether or not it’s true. For example, Sanfey, et al.’s Neuroeconomics: Cross Currents in Research on Decision-Making (2006) shows convincing neural evidence that there is a dual-process for decision-making (although they describe it as controlled and automatic processes). According to their study with the Ultimatum Game, there are two major brain regions that appear to be active when a participant receives an unfair offer. Participants that rejected the offer showed higher activity in the anterior insula than in the dorsolateral prefrontal cortex (dlPFC). Participants that accepted the offer, however, demonstrated higher activity in the dorsolateral prefrontal cortex than in the anterior insula. It would seem that the area of the brain associated with deliberative processing (being the dlPFC) is more active when participants are “rational” in their decision-making, while the area of the brain associated with emotional processing (being the anterior insula) is more active when participants are “emotional.” So, what does this mean?
Emotional processing is what makes humanity so interesting to me. We’re not rational robots, we’re driven by more than rational thought and that’s also what seems to make us social beings, according Lehrer (2006) and Grimes (2003).
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It was strange for me to read about ocytocin in relation to economics because in my conference work I have been learning about it in terms of romantic and maternal love, which both involve trust. I think the concept that trust has adapted through communal living is intriguing. It makes sense, I suppose, that oxytocin, the "trust chemical", would be involved in many occupations where people must rely on others for information and cooperation. It was surprising to me to read about neuroeconomics, I didn't expect that specific combination. However, as far-fetched as it seemed to me at first, it makes sense to try to come up with a strategy for encouraging people to plan for the future and place a larger emphasis on risk evaluation.
On pg. 175 Damasio writes, "willpower draws on the evaluation of a prospect, and
that evaluation may not take place if attention is not properly driven to both the immediate trouble and the future payoff, to both the suffering now and future gratification. Remove the latter and you remove the lift from under your willpower's wings. Willpower is just another name for the
idea of choosing according to long-term outcomes rather than short-term ones."
Then pg. 177, "...we must recognize that humans do have some room for such freedom, for willing and performing actions that may go against the apparent grain of biology and culture. Some sublime human achievements come from rejecting what biology or culture propels individuals to do."
Damasio mentions willpower passively throughout the book, and it is clear that he believes in it. However, these two passages seem to contradict each other. Whatever action that goes against culture or biology is also going with the grain of whatever led to the decision. Some people think that the ability to make decisions gives them the agent of will, and that they themselves are the stimuli for their decisions. But what really causes decisions - me, or the reasons why I choose? People and their decision-making capacities do not decide what events will be meaningful - meaningful in the sense that they inform their decisions. Whenever we feel free to act as we wish it is only because we are unaware of the controlling forces that mediate our decisions - forces over which we have no control. Will, or the capacity to act on knowledge, may be a cause, but like everything else it is caused.
“Except that cognition is a smart pony, and emotion a big elephant.”
‘Driven to Market’ and ‘To Trust is Human’, were particularly interesting articles that investigated a fascination, specifically human behavior (that of collecting and purchasing material, and participating in a collective market economy) to neuroeconomics. Because, as Damasio confirmed, we cannot separate our emotions from our thought processes, it makes sense that both would be tied to the way we make decisions. Obviously advertising has had an effect on our daily product consumption, but the realization that it can illicit a more emotional side of the brain is fascinating and a bit scary. The Cola verse Pepsi challenge beautifully portrayed the role of emotions in altering rational decision. This also has interesting implications; our emotions can over-ride our sense of reason.I hoped to talk about this in more depth.
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