The Frontal Cortex

At any given moment, the cortex is riven by disagreement, as rival bits of tissue contradict each other. Different brain areas think different things for different reasons; all those mental components stuffed inside our head are constantly fighting for influence and attention. In this sense, the mind is really an extended argument. This vociferous debate is made clear in this new paper, which shows that different brain areas are activated by risk and reward when people make a risky decision:

Using functional magnetic resonance imaging and a task that simulates risky decisions, we found that the dorsal region of the medial prefrontal cortex (MPFC) was activated whenever a risky decision was made, but the degree of this activity across subjects was negatively correlated with their risk preference. In contrast, the ventral MPFC was parametrically modulated by the received gain/loss, and the activation in this region was positively correlated with an individual's risk preference. These results extend existing neurological evidence by showing that the dorsal and ventral MPFC convey different decision signals (i.e., aversion to uncertainty vs. approach to rewarding outcomes), where the relative strengths of these signals determine behavioral decisions involving risk and uncertainty.

This experiment helps us understand why people so often misjudge risk. (For proof of this mental flaw, just pick up a newspaper. All those brilliant financial managers with their elaborate models were convinced that the mortgage debt was risk-free.) Because we assess risk and reward separately, and not as part of some unified Bayesian equation, we're able to selectively inhibit those brain areas warning us of risk. (This is the downside of executive control: we can silence our inner Cassandra.) If Moody's says the debt is AAA, then it must be safe, and so we just focus on the nub of cortex telling us to seek out rewards. We don't worry about what will happen when foreclosures rise, or the market tanks, or something unexpected happens. The mind, in other words, has lost its delicate equilibrium, the emotional poise that comes when competing brain areas are allowed to freely compete.

For more, check out this Jonathan Cohen review.