Financial risks are a relatively recent phenomenon, evolutionary speaking. As such, the human brain may not have perfectly adapted protocol to deal with it. In a first stage, we would like to know how the brain perceives risks and how it generates decisions in very controlled, yet "ecologically relevant" situations. We already know quite a bit about reward learning, and how simple but robust temporal difference modeling is hardwired in the human brain (and the brains of monkeys, rats and mice, for that matter). The team has brought another aspect to the forefront in this regard: risk perception and risk learning. These are necessary for any organism that is risk-sensitive (whether risk-averse of risk-loving) or even just attempts to learn to predict stochastic payoffs as accurately as possible. We are also going beyond reward learning, to study belief formation about events that are not (yet) linked to rewards (or losses), like when you are predicting whether it will snow tomorrow but don't know yet whether you'll be given the opportunity to go skiing (reward) or have to drive on slippery roads with the risk of crashing (loss).
The Annual Review of Financial Economics published an article on the relevance of decision neuroscience for finance. Get it by clicking here.
