We study the behavior of subjects facing choices between certain, risky, and ambiguous lotteries. Subjects' choices are consistent with the economic theories modeling ambiguity aversion. Our results support the conjecture that subjects face choice tasks as an estimation of the value of the lotteries, and that the difficulty of the choice is an important explanatory variable (in addition to risk and ambiguity aversion). The brain imaging data suggest that such estimation is of an approximate nature when the choices involve ambiguous and risky lotteries, as the regions in the brain that are activated are typically located in parietal lobes. Thus such choices require mental faculties that are shared by all mammals, and in particular are independent of language. In contrast, choices involving partial ambiguous lotteries additionally produce an activation of the frontal region, which indicates a different, more sophisticated cognitive process.
Bibliographical noteFunding Information:
We thank a large number of colleagues that have listened to formal and informal presentations of these results, for comments and insights; in particular, the participants of the Minnesota Conference on Neuroscience and Economics. This research was financed in part by the NSF Grant 0136556 to Aldo Rustichini.
- Brain imaging
- Decision theory
- Procedural choice