Brain Biology

Dopamine

Dopamine
“Reward, pleasure, and happiness are complex, and the motivated pursuit of them occurs in at least a rudimentary form in many species. The neurotransmitter dopamine is central to understanding this.” Sapolsky (2017): Behave, p. 64.
Rewards
“Some rewards, such as sex, release dopamine in every species examined. For humans, just thinking about sex suffices. Food evokes dopamine release in hungry individuals of all species, with an added twist in humans. Show a picture of a milkshake to someone after they’ve consumed one, and there’s rarely dopaminergic activation—there’s satiation. But with subjects who have been dieting, there’s further activation…” Sapolsky (2017): Behave, pp. 65–66.

Question: Which economic concept(s) that we learned most relate to the above quote?

Dopamine

Habituation
“A monkey has learned that when he presses a lever ten times, he gets a raisin as a reward. That’s just happened, and as a result, ten units of dopamine are released in the accumbens. Now—surprise!—the monkey presses the lever ten times and gets two raisins. Whoa: twenty units of dopamine are released. And as the monkey continues to get paychecks of two raisins, the size of the dopamine response returns to ten units. Now reward the monkey with only a single raisin, and dopamine levels decline.” Sapolsky (2017): Behave, p. 67.

Question: Which economic concept(s) that we learned most relate to the above quote?

Relative size
“Depending on the circumstance, monkeys were trained to expect either two or twenty units of reward. If they unexpectedly got either four or forty units, respectively, there’d be an identical burst of dopamine release; giving one or ten units produced an identical decrease. It was the relative, not absolute, size of the surprise that mattered over a tenfold range of reward.” Sapolsky (2017): Behave, pp. 68–69.

Question: Which economic concept(s) that we learned most relate to the above quote?

Dopamine

The Dopamine System Is Bidirectional
“It responds with scale-free increases for unexpected good news and decreases for bad. Schultz demonstrated that following a reward, the dopamine system codes for discrepancy from expectation—get what you expected, and there’s a steady-state dribble of dopamine. Get more reward and/or get it sooner than expected, and there’s a big burst; less and/or later, a decrease.” Sapolsky (2017): Behave, p. 68.

Question: Is this evidence of loss aversion?

Anticipation
“Back to our well-trained monkey working for a reward. A light comes on in his room, signaling the start of a reward trial. He goes over to the lever, presses ten times, and gets the raisin reward; this has happened often enough that there’s only a small increase in dopamine with each raisin. However, importantly, lots of dopamine is released when the light first comes on, signaling the start of the reward trial, before the monkey starts lever pressing.” Sapolsky (2017): Behave, p. 70.

Question: Try to provide an evolutionary argument for the role of anticipation.
Hint: What was the fox doing at the start of The Fox and the Grapes?

Amygdala

Fear and Aggression
“Thus considerable evidence implicates the amygdala in aggression. But if you asked amygdala experts what behavior their favorite brain structure brings to mind, ‘aggression’ wouldn’t top their list. It would be fear and anxiety. Crucially, the brain region most involved in feeling afraid and anxious is most involved in generating aggression.” Sapolsky (2017): Behave, p. 35.
The Sensory Shortcut
“Importantly, some sensory information entering the brain takes a shortcut, bypassing the cortex and going directly to the amygdala. Thus the amygdala can be informed about something scary before the cortex has a clue. Moreover, thanks to the extreme excitability of this pathway, the amygdala can respond to stimuli that are too fleeting or faint for the cortex to note. Additionally, the shortcut projections form stronger, more excitable synapses in the BLA than do the ones from the sensory cortex; emotional arousal enhances fear conditioning through this pathway. This shortcut’s power is shown in the case of a man with stroke damage to his visual cortex, producing ‘cortical blindness.’ While unable to process most visual information, he still recognized emotional facial expressions via the shortcut.
Crucially, while sensory information reaches the amygdala rapidly by this shortcut, it isn’t terribly accurate (since, after all, accuracy is what the cortex supplies).” Sapolsky (2017): Behave, pp. 39–40.

Heuristics and Biases

The heuristics-and-biases program
According to the heuristics-and-biases program, we form judgments by using heuristics – functional but imperfect rules of thumb or mental shortcuts that help us form opinions and make decisions quickly. Here are four prominent heuristics:
Anchoring and adjustment
The anchoring-and-adjustment heuristic instructs you to pick an initial estimate (anchor) and adjust the initial estimate up or down (as you see fit) in order to come up with a final answer. Therefore, estimates will (imperfectly) track the anchors – even when irrelevant or uninformative.
Representativeness
The representativeness heuristic tells you to estimate the probability that some outcome was the result of a given process by reference to the degree to which the outcome is representative of that process: the more representative the outcome, the higher the probability.
Availability
The availability heuristic makes you assess the probability that some event will occur based on the ease with which the event comes to mind: the easier it comes to mind, the higher the probability.
Affect
The affect heuristic gets you to assign probabilities to consequences based on how you feel about the thing they would be consequences of: the better you feel about it, the higher the probability of good consequences and the lower the probability of bad.
Bias
The heuristics-and-biases program does not say that people are dumb: to the contrary, it says that following heuristics is a largely functional way to make speedy decisions when it counts. Because the heuristics are imperfect, however, they can lead to bias, that is, systematic and predictable error. Angner (2016): A Course in Behavioral Economics, 2nd ed.
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