The Inner Argument

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.

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This ties in well with what I am reading in Philip Zimbardo's book, The Lucifer Effect; depending on the situation and the system affecting the situation, we move to the direction perceived as having higher rewards, even if, in Zimbardo's parlance, that reward may come to us through evil doing. This of course depends on many factors, but it's interesting to see how the mind is set up to favor a course of action in the context of situational factors.

i think the mistakes made by financial managers are primarily due to their lack of proper statistical understanding (ala black swan) on how mortgage debt and the economy work. anatomical unification of risk and reward calculations would not prevent mistakes from being made, would it?

Jonah -

I picked up PROUST WAS A NEUROSCIENTIST on a recent trip to the Adirondacks. I pulled it out on breaks during hiking and canoeing and was stunned and elated by your work. Thank you. This book is a treasure and speaks directly to my own journey through science and poetry. In my own humble way I return the favor:

http://thelaruralpress.blogspot.com/

All the best/ James Hoffman Goertel

Jonah -

I picked up PROUST WAS A NEUROSCIENTIST on a recent trip to the Adirondacks. I pulled it out on breaks during hiking and canoeing and was stunned and elated by your work. Thank you. This book is a treasure and speaks directly to my own journey through science and poetry. In my own humble way I return the favor:

http://thelaruralpress.blogspot.com/

All the best/ James Hoffman Goertel

It isnt that laws fail; it is simply that a judge rules due to emotion and comes up with the best solutions regardless of what the law might say. You know; the way that Sotamayor and whats-her-name want to do.

The subsequent time I go through a blogging site, I hope that it doesnt disappoint me as much as this a person. I suggest, I understand it was my selection to go through, but I actually thought youd have one thing attention-grabbing to say. All I hear is really a bunch of whining about something which you could solve in case you werent also active trying to find awareness.

My point is that when a film maker depicts the darker side of something, it does not mean hes not being hypocrite. So, jaago Indiaaur goron ki chat naa band karo