Decomposing loss aversion from a single neural signal
Ruining Wang,
Xiaoyi Wang,
Michael L. Platt,
Feng Sheng
Affiliations
Ruining Wang
School of Management, Zhejiang University, Hangzhou, Zhejiang 310058, China; State Key Lab of Brain-Machine Intelligence, Zhejiang University, Hangzhou, Zhejiang 310058, China; MOE Frontier Science Center for Brain Science & Brain-Machine Integration, Zhejiang University, Hangzhou, Zhejiang 310058, China; Neuromanagement Laboratory, Zhejiang University, Hangzhou, Zhejiang 310058, China
Xiaoyi Wang
School of Management, Zhejiang University, Hangzhou, Zhejiang 310058, China; State Key Lab of Brain-Machine Intelligence, Zhejiang University, Hangzhou, Zhejiang 310058, China; MOE Frontier Science Center for Brain Science & Brain-Machine Integration, Zhejiang University, Hangzhou, Zhejiang 310058, China; Neuromanagement Laboratory, Zhejiang University, Hangzhou, Zhejiang 310058, China
Michael L. Platt
Wharton Neuroscience Initiative, the Wharton School, University of Pennsylvania, Philadelphia, PA 19104, USA; Department of Neuroscience, Perelman School of Medicine, University of Pennsylvania, Philadelphia, PA 19104, USA; Department of Psychology, University of Pennsylvania, Philadelphia, PA 19104, USA; Marketing Department, the Wharton School, University of Pennsylvania, Philadelphia, PA 19104, USA
Feng Sheng
School of Management, Zhejiang University, Hangzhou, Zhejiang 310058, China; State Key Lab of Brain-Machine Intelligence, Zhejiang University, Hangzhou, Zhejiang 310058, China; MOE Frontier Science Center for Brain Science & Brain-Machine Integration, Zhejiang University, Hangzhou, Zhejiang 310058, China; Neuromanagement Laboratory, Zhejiang University, Hangzhou, Zhejiang 310058, China; Wharton Neuroscience Initiative, the Wharton School, University of Pennsylvania, Philadelphia, PA 19104, USA; Corresponding author
Summary: People often display stronger aversion to losses than appetite for equivalent gains, a widespread phenomenon known as loss aversion. The prevailing theory attributes loss aversion to a valuation bias that amplifies losses relative to gains. An alternative account attributes loss aversion to a response bias that avoids choices that might result in loss. By modeling the temporal dynamics of scalp electrical activity during decisions to accept or reject gambles within a sequential sampling framework, we decomposed valuation bias and response bias from a single event-related neural signal, the P3. Specifically, we found valuation bias manifested as larger sensitivity of P3 to losses than gains, which was localizable to reward-related brain regions. By contrast, response bias manifested as larger P3 preceding gamble acceptance than rejection and was localizable to motor cortex. Our study reveals the dissociable neural biomarkers of response bias and valuation bias underpinning loss-averse decisions.
