Risk Taking And The
February 16, 2007
you leave your comfortable job for one that pays better but is less
secure? Should you have a surgery that is likely to extend your life but
poses some risk that you will not survive the operation? Should you
invest in a risky startup company whose stock may soar even though you
could lose your entire investment? In the Jan. 26 issue of the journal
Science, UCLA psychologists present the first neuroscience research
comparing how our brains evaluate the possibility of gaining versus
losing when making risky decisions.
Participants in the study, mostly UCLA students in their 20s, were given
$30 and then asked whether they would agree to each of more than 250
gambles in which they had a 50-50 chance of winning an amount of money
or losing another amount of money. Would they, for example, agree to a
coin toss in which they could win $30 but lose $20? While the 16
participants were considering the possible wagers, they were in a
functional magnetic resonance imaging (fMRI) scanner at UCLA's
Ahmanson–Lovelace Brain Mapping Center, where researchers studied their
brain activity; the technique uses magnetic fields to spot active brain
areas by telltale increases in blood oxygen.
For each question, the participants answered whether they would strongly
agree to the gamble, weakly accept it, weakly refuse it or strongly
reject it. Participants were not told whether they had won or lost until
after they left the scanner; afterwards, the researchers randomly
selected three of the gambles, and if the participants had previously
agreed to accept those, the researchers flipped a coin and the
participants either won or lost the money. What interested the
researchers, however, was the activity of the brain's regions during the
decision-making process, not the subject's reaction to winning or
to right) Craig Fox, associate professor of policy at the UCLA Anderson
School of Management; UCLA researcher Sabrina Tom; and Russell Poldrack,
UCLA associate professor of psychology, at UCLA’s Ahmanson–Lovelace
Brain Mapping Center.
On average, participants needed to be offered a 50 percent chance of
winning about $19 to risk losing $10, but that amount varied widely
among the subjects. One subject, for example, needed the chance to win
$60 to risk losing $10, while another needed only the chance to win $11
to risk losing $10. The researchers could predict people's tolerance to
risk by analyzing their brain patterns.
"Looking at how your brain responds to potential gains versus potential
losses, we can predict how risk-averse you are going to be in your
choices," said study co-author Russell Poldrack, UCLA associate
professor of psychology, who holds UCLA's Wendell Jeffrey and Bernice
Wenzel Term Chair in Behavioral Neuroscience. "Brain activity predicts
"Individual differences in brain activity correspond very closely to
individual differences in participants' actual choices," said co-author
Craig Fox, an associate professor of policy at the UCLA Anderson School
of Management and an associate professor of psychology. "The people who
show much more neural sensitivity to losses relative to gains are the
same people who are very reluctant to gamble unless they are offered
extremely favorable gambles. The people who are about as sensitive to
losses as gains neurologically are the ones who are more willing to
about the possibility of winning money turns on some of the same areas
of the brain that are activated when people take cocaine, eat chocolate
or look at a beautiful face, Poldrack said.
The researchers studied which parts of the brain became more active or
less active as the amount of money participants could win or lose
increased. Regions that become more active as the amount increases are
considered "reward centers" in the brain, such as the prefrontal cortex
and the ventral striatum, Poldrack said.
The researchers also found that reward centers in the brain respond not
only when we actually receive rewards but also when we make decisions
about potential rewards, and that when we make decisions, the reward
circuitry in the brain is more sensitive to possible losses than to
The research is federally funded by the National Science Foundation's
Human and Social Dynamics program (http://www.nsf.gov).
What happens in our brain when we think about potentially losing money?
Some of the same areas that get turned on when we think about winning
money get turned off when we think about losing money.
A surprising finding is that as the amount of a potential loss
increases, the parts of the brain that process fear or anxiety, such as
the amygdala or the insula, are not activated.
"What we found instead," Poldrack said, "is you don't turn anything up.
You turn down the reward areas of the brain, and you turn them down more
strongly for losses than you turn them up for gains. Just as people
respond more strongly to a $100 potential loss than a $100 potential
gain, the brain responds more strongly to a $100 potential loss versus a
$100 potential gain."
Fox, a behavioral decision theorist, said the study confirms previous
research showing that people are more turned off by losses than they are
turned on by gains and it provides, for the first time, neural evidence
to support this pattern.
"We found for the first time that the neural response to potential
losses is larger than the neural response to potential gains," Fox said.
Poldrack and Fox said they are both comfortable with risk in their
lives, declining, for example, to buy insurance when they rent cars and
declining to buy extended warranties for products.
When Fox was an undergraduate at the University of California, Berkeley,
his faculty mentor was Daniel Kahneman, who later won the 2002 Nobel
Memorial Prize in Economic Sciences. A key principle from Kahneman's
seminal prospect theory, which describes how individuals evaluate losses
and gains, is loss aversion: When people consider future actions, they
are more sensitive to potential losses than to potential gains. Most
people are about twice as sensitive to potential losses as to potential
gains, which leads to risk aversion.
"In this new study, we found for the first time neurophysiological
evidence for prospect theory, the most important behavioral model of
decision-making to emerge in the past 50 years, whose components include
the asymmetry between how losses and gains are valued," Fox said.
Sabrina Tom, a UCLA research assistant in psychology and lead author of
the study, said the people who have the most deactivation in the reward
pathways were also the most loss-averse.
A woman in a bad marriage, Tom said, is not likely to leave unless she
has prospects that are much better than what she has.
"She's probably not going to leave for something that's only moderately
better," Tom said. "She needs to know it's going to be a lot better
before giving up what she already has."
The people who were most willing to gamble were least turned on as the
stakes got higher, while the people who were most averse to gambling
were most turned on as gains and losses increased, Poldrack said.
The biggest risk-takers, who are willing to accept very risky gambles,
have brains that respond less as the stakes increase, Poldrack said.