A lighter wallet may not be the only consequence of a poorly placed bet at the blackjack table. A new study demonstrates that negative outcomes have a greater influence on subsequent decisions than positive ones do: individuals are more likely to take a big risk following a loss than they would after a gain. Reporting in the current issue of the journal Science, the scientists who conducted the research propose that these results could have implications that reach beyond the gambling tables, strengthening psychologists' contention that humans are anything but rational decision makers.
University of Michigan psychologists William J. Gehring and Adrian R. Willoughby enlisted twelve participants to participate in a series of gambling-style trials. Subjects had a choice of pressing one of two squares that contained either the number five or 25. About a second after choosing a number, that square flashed either green or red, corresponding to a gain or a loss, respectively. Successfully picking five added a nickel to the individual's winnings, but a misplaced bet on the same number led to a deduction of that amount. Only a few seconds separated one bet from the next, forcing the participants to act quickly. In most cases, a loss led to a bolder move, with the individual often picking 25 instead of the more conservative five. Winning turns engendered less risky behavior.
Having outfitted the twelve participants with electrode caps, the researchers used a measure of the brain's electrical activity known as event-related brain potentials (ERPs) to monitor their physiological responses to different outcomes. Losses generated ERPs that originated deep within the medial frontal cortex, a part of the brain located behind the upper forehead. But, oddly, when a subject who had chosen a five learned that 25 would have won as well, thus revealing a lost opportunity for a larger gain, these ERPs did not surface. Gehring also found the quickness of the brain's reaction surprising. Analysis of the ERPs revealed a specific pattern of brain activity that peaked just 265 milliseconds after subjects saw an outcome.
Gehring and Willoughby note that such psychological insights into short-term decision-making may be important in that humans no longer appear to be the consistently rational beings that are built into economic models. "The findings suggest that in many situations our brains rush to judgment," Gehring says, adding that "at some basic, neurological level, losses really do loom larger than gains."