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Are Risky Choices Actually Guided by a Compensatory Process? New Insights from fMRI

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  • Li-Lin Rao
  • Yuan Zhou
  • Lijuan Xu
  • Zhu-Yuan Liang
  • Tianzi Jiang
  • Shu Li

Abstract

The dominant theories about risky decision-making assume that decision conflicts are solved by a compensatory process involving a trade-off of probability against payoff, but it is unclear whether these theories actually represent the events that occur when people make a risky decision. By contrasting a preferential choice with a judgment-based choice that required a compensatory process, we explored the mechanisms underlying risky decision-making. First, using parametric analyses, we identified the dorsomedial prefrontal cortex (dMPFC) as the specific region in charge of task-related conflict in risky decision-making tasks. We also showed that the dMPFC was activated less when judgment-based choices were being made, implying that the conflict experienced during a judgment-based choice was not as strong as the conflict that was experienced during the preferential choice. Our results provide neural evidence that preferential choice cannot be characterized solely as a compensatory process. Thus, questions were raised about whether existing compensatory theories could adequately describe individual risky decisions.

Suggested Citation

  • Li-Lin Rao & Yuan Zhou & Lijuan Xu & Zhu-Yuan Liang & Tianzi Jiang & Shu Li, 2011. "Are Risky Choices Actually Guided by a Compensatory Process? New Insights from fMRI," PLOS ONE, Public Library of Science, vol. 6(3), pages 1-11, March.
  • Handle: RePEc:plo:pone00:0014756
    DOI: 10.1371/journal.pone.0014756
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    References listed on IDEAS

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    1. Ulrich Schmidt & Chris Starmer & Robert Sugden, 2008. "Third-generation prospect theory," Journal of Risk and Uncertainty, Springer, vol. 36(3), pages 203-223, June.
    2. Tversky, Amos & Kahneman, Daniel, 1992. "Advances in Prospect Theory: Cumulative Representation of Uncertainty," Journal of Risk and Uncertainty, Springer, vol. 5(4), pages 297-323, October.
    3. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
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