USA Today (Society for the Advancement of Education): Anatomy of a gamble - Risk

Within about a quarter of a second after we see the outcome of a gamble, our brains have processed whether we've won or lost, according to a University of Michigan, Ann Arbor, study. Moreover, choices about the next wager made a few seconds after losses are riskier than those made after gains, providing an apparent neurological counterpart of the gambler's fallacy--the misguided belief that a win is bound to follow a string of losses.

Conducted by assistant professor of psychology William J. Gehring and doctoral student Adrian R. Willoughby, the study confirms the unsettling existence of neurological activity that quickly, automatically, and unconsciously evaluates the significance of choices we have made, then guides our subsequent decisionmaking. This has implications for many quick decisions beyond those made in gambling casinos, including choices routinely made by pilots responding to cockpit indicators, traders checking stock prices, and physicians, police officers, or firefighters faced with life-threatening emergencies.

"The findings suggest that, in many situations, our brains rush to judgment," indicates Gehring. "They rapidly evaluate whether events are good or bad, and this judgment influences how we react." While economists have tended to assume that people make rational decisions, psychologists have long recognized that human decisionmaking is often irrational. Still, Gehring says, he was surprised by how quickly the brain reacted to gain or loss--within 265 milliseconds of seeing the outcome of a decision--and by how strong the gain or loss influenced the next choice people made a few seconds later.

Gehring and Willoughby used a measure of the brain's electrical activity known as event-related brain potentials (ERPs). Subjects, who wore electrode caps, were asked to pick one or two numbers (five or 25) during 24 blocks of 32 trials--making 768 gambling decisions in all. A second after they picked a number, the background changed to green for a win and red for a loss; then, a few seconds later, subjects were faced with another choice. After each pick, subjects won or lost five or 25 cents.

Analyzing the ERPs during this process, the researchers found a characteristic pattern of negative-polarity electrical activity that peaked about one-quarter of a second after participants learned whether they had won or lost. This ERP originated in the medial frontal cortex, either in or near the anterior cingulate cortex--a place deep in the brain behind the upper part of the forehead.

Previous work by Gehring and others has shown that similar ERPs are produced when subjects make errors. In the design of the current experiment, however, the researchers structured the gambling trials so that subjects could see what they would have gained or lost had they selected the other choice available to them. Making the other choice sometimes would have resulted in a loss greater than the loss subjects actually incurred, or a gain greater than the one they actually obtained. Yet, the researchers found that ERPs emanating from deep in the brain were triggered only by losses, not when subjects failed to choose the larger of two possible gains.