PhD Defence: Context Effects in Valuation, Judgment and Choice

How do our brains make daily choices and judgments? How does the surrounding context influence this process? In her PhD thesis entitled Context Effects in Valuation, Judgment and Choice: A Neuroscientific Approach, Kaisa Hytönen investigates these questions in risky and social settings. Her findings imply that prior experiences influence subsequent choices by changing the balance between emotional and deliberative brain processes. Results from her study also suggest that people learn to behave as others do quite automatically.

Most decisions involve uncertainty and many of them are preceded by other choices and outcomes. Sometimes decision-makers end up taking excessive risks after wins or losses. This type of increase in risk appetite is apparent, for example, in financial markets, horse race betting and in games. This thesis research investigates these dependencies between choices by recording the brain activations of people while they make simple choices similar to those that are made by the contestants in the “Deal or no deal” game. The results indicate that both positive and negative outcomes increase emotional brain reactions and decrease cognitive deliberation. These changes in the brain activation are further related to increasing risk-taking in subsequent choices. This knowledge of the role of emotion and deliberation in decision-making may help in prohibiting excessive risk-taking. For example, decision-makers might be able to avoid excessive risk-taking by ‘cooling down’ emotionally before making new choices or by paying special attention to other considerations. Policies that help decision-makers in achieving these goals may lead to more consistent choice behaviour and long-term satisfaction. Social environment also has a huge impact on our behaviour. The research reported in this thesis indicates that conformity to the behaviour of others is driven by similar brain mechanisms than simple reinforcement learning. In the experiment, participants rated the attractiveness of faces. When people were informed that others had rated a face differently than they did, their brain produced an ‘error reaction’. The stronger the error reaction, the more likely participants were to change their attractiveness judgment in the direction of the general opinion later on. Such automatic learning mechanisms can cause strong behavioural effects. Social conformity is indeed very effective in guiding consumer behaviour. People may even oppose their own financial interests or act against the best interests of the environment just to match the behaviour of their peers. Social conformity can be used in public policy programmes to promote advantageous behavioural patterns such as pro-environmental behaviours. In general, if social marketing campaigns are successful in creating a perception that the majority of the salient others enjoy healthy food, support environmental values and quit smoking, this can lead to reduced obesity and pollution as well as decreasing the number of lung cancer patients.

Kaisa Hytönen defended her dissertation on December 16 2011. Her promoter was Prof.Dr Ir. Ale Smidts. Her copromoters were Dr Alan Sanfey and Dr Vasily Klyucharev. Other members of the Doctoral Committee were Prof. Dr Stijn van Osselaar, Prof. Dr Ingmar Franken, and Prof. Dr Bernd Weber, Prof. Dr Dirk Smeesters, and Prof. Dr Guillén Fernández.

About Kaisa Hytönen

 

 

Kaisa Hytönen (Finland, 1981) majored in Biomedical Engineering with a minor in Systems and Operations Research at the Helsinki University of Technology. In 2005, she received her master’s degree in Engineering Physics with a distinction. Soon after her graduation she started her PhD research in neuroeconomics at the department of Marketing Management, at RSM. Due to the interdisciplinary nature of her PhD project, Kaisa conducted most of her research in Nijmegen at the Donders Institute for Brain, Cognition and Behaviour, Centre for Cognitive Neuroimaging.

She has presented her work at several international conferences, such as the annual meetings of the Society for Neuroeconomics in the United States. Currently, she works as a post-doctoral researcher at the Aalto University in Finland.

Abstract of Context Effects in Valuation, Judgment and Choice

 

 

It is well known that our choices and judgments depend on the context. For instance, prior experiences can influence subsequent decisions. People tend to make riskier decisions if they have a chance to win back a previous loss or if they can gamble with previously won money. Another example of context is social environment. People often change their judgments to conform to observed group behaviour. Since the reasons driving such context effects are less clear, this dissertation explores the mechanisms behind behavioural patterns with the help of a modern neuroscience technique, functional magnetic resonance imaging. The dissertation concentrates particularly on choice and judgment in risky and in social settings. It consists of three parts. The first part provides a primer on the methodology of neuroeconomics and a synthesis of the body of knowledge on the brain mechanisms of valuation and choice. The second part investigates risk behaviour in sequential choice situations. The findings suggest that decision makers tend to take excessive risk after both wins and losses, due to increasing affective arousal and decreasing control. The third part of this dissertation focuses on the influence of social context on judgment. Results indicate that people automatically learn to behave as others do—being different from others is processed in the brain in a similar way to behavioural errors. This indicates the great power of relevant social groups in influencing our behaviour. Overall, this dissertation highlights the reasons behind context dependency and demonstrates the power of modern neuroscientific methods for understanding economic behaviour.