Economics Seminar（2015-04）

Topic: Why Do Irrelevant Alternatives Matter? An fMRI-TMS Study of Context-Dependent Choice
Speaker: Chen-Ying Huang
Affiliation: Department of Economics, National Taiwan University

Time: Tuesday, April 7 from 2:00-3:30pm
Location: Room 216, Guanghua Building 2

Abstract

The decoy effect implies that consumer demand can be manipulated by adding irrelevant alternatives (decoys) to the choice set, contradicting standard economic theory. We investigated the neural underpinning of this effect using functional magnetic resonance imaging. When the chosen alternative dominated the decoy, the left ventral striatum was more active, suggesting an increased decision utility bestowed by the context. As this may lead to biased decision-making, we considered how control might be recruited to overcome the bias. The left inferior parietal lobule (IPL) negatively correlated with a trial-by-trial measure of the strength of the decoy effect, suggesting that heightened attention may help. More specifically, the right inferior frontal gyrus (IFG), often implicated in overriding irrelevant responses, correlated with the activity of IPL when control was critical to making an unbiased decision. The left ventral striatum, in turn, correlated with the activity of IFG when the role of control would be to increase, as opposed to decrease, the decision utility of the chosen alternative. These findings suggest that IFG may play a role in changing decision utility and reducing decoy-induced bias. Transcranial magnetic stimulation (TMS) provided further evidence on the role of IFG. Participants whose IFG was temporarily disrupted by TMS exhibited more decision-bias (in the form of “preference reversals”), and were much faster when the chosen alternative dominated the decoy, than a control group of participants whose site of simulation was the vertex.

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