Striatum

Striatum

The striatum is part of the basal ganglia. The subcortical structure has been linked to emotion and reward anticipation. Interestingly, emotion has been studied not only by psychologists, but also by economists. While doubtless one of the most famous works on behavioral finance (e.g. prospect theory) was written in 1979 by Kahneman and Tversky, emotions have often been cited as predictors in financial decision-making.

Serving with a smile. Smile is often used to convey emotions and states of mind. Image: Copyright © Megan Jorgensen (Elena)

Investors are often classified as risk-averse (or risk-avoiding) and risk-neutral, whereas risk-loving (or risk-seeking) would be a more appropriate reference for gambling. As explained by Nicolle and coauthors (2010), risk taking behaviors may be influenced by regret, since the individual wants to avoid situations which would lead to the unpleasant feeling in the future. In their study, they found that the striatum mediated this relationship. In addition, others (Antzoulatos & Miller, 2011) showed that striatal neurons play a role in learning.

References:

• Antzoulatos, E. G. and Miller, E. K. (2011). Differences between neural activity in prefrontal cortex and striatum during learning of novel abstract categories. Neuron, 71: 243-9.
• Kahneman, D. and Tversky, A. (1979). Prospect theory: An analysis of decision under risk. Econometrica, 47 (2): 263-92.
• Nicolle, A., Bach, D. R., Driver, J. and Dolan, R. J. (2010). A role for the striatum in regret-related choice repetition. Journal of Cognitive Neuroscience, 23 (4): 845-56.