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Recombination of expected reward and risk. Recent findings (see Neuron, 2006) showed that expected reward and risk are encoded in different areas of the brain. However, sound evaluation of a gamble require these two parameters to be recombined. What is the brain mechanism underlying this recombination? Is utility encoded by the brain? What areas are engaged?
Rational expectation theory suggests that the analysis of a stock market should be done either through eduction from detailed knowledge of the economy of through mathematical modeling. However, how humans actually analyze trading activity remains largely unknown. How does inference take place?
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