Distinct neuropsychological processes may mediate decision-making under uncertainty with known and unknown probability in gain and loss frames

Abstract

Decision-making under uncertainty has been studied in psychiatry, economic psychology, and neuroeconomics. Psychiatric patients (e.g., drug addicts) often show low degrees of aversion to potential danger. Investigation into neuropsychological processing underlying decision under uncertainty is important for medical treatments of neuropsychiatric disorders. In economic decision theory, choices under uncertainty with and without known probabilities of outcomes have been discriminated. Regarding decision-making under uncertainty with known probabilities (risk), Kahnemann-Tversky's prospect theory revealed that people tend to avoid uncertainty in potential gains (i.e., risk-aversion in a gain-frame); on the contrary, prefer uncertainty in potential losses (i.e., risk-seeking in a loss-frame). Regarding choices between possible gains with known and unknown probabilities, Ellsberg demonstrated that, in a gain-frame, people tend to avoid uncertainty with unknown probabilities, more dramatically than uncertainty with known probabilities. This can be explained by risk/uncertainty aversion in the gain-frame, suggesting that uncertainty with known and unknown probabilities (i.e., risk and Knightian uncertainty, respectively) may possibly be processed by similar neuropsychological processing in the gain-frame. However, in spite of accumulating evidence in neuroimaging and neuroeconomic studies, it is still unknown whether probability and Knightian uncertainty in the loss-frame are mediated by similar neuropsychological processes as well. We propose that distinct neuropsychological processes may mediate potential losses with known and unknown probabilities, based on recent findings in neuroeconomics and our experiment. Importance of examining subjects' degree of Knightian uncertainty aversion for the prediction/treatment of drug addicts' risky behavior (e.g., needle-sharing) is also discussed.