Primative reward, computer brain models, evolutionary psychology, neurochemistry, mental health, and money. In a "Hot Topics" paper from Sciencewatch, Wolfram Schultz talks (mp3 link) [great 10 minute audio file] about reward and behavior - some very interesting insights into a number of subjects not limited to happiness, economics, and utility theory.
There are no particular sensory receptors through which the brain is specifically informed about the occurrence of a reward event or object. Thus the brain cannot identify a reward from the activation of a neural "labeled reward line." The brain needs to extract the reward information through its own neural mechanisms.
To investigate this we need to define what a reward is, and this should be based on behavior. Ideally, the same definition would hold for vegetative rewards, like food, liquid, and sex, as well as for more elaborate rewards, like money that we use for daily decisions.
The paper describes some of the basic behavioral theories relating to reward, namely animal learning theory from experimental psychology, and utility theory from microeconomics. Through neuroscience it connects entirely different scientific disciplines.
If you are interested in a more digestable version of what Schultz's work touches on, Money magazine has a great article from 2002.
...Schultz studies the workings of dopamine, the brain chemical that gives you a "natural high." Dopamine is what makes you feel good when a stock you buy goes up, and neurons transmit that chemical to many parts of the brain, including the nucleus accumbens. The latest scientific discoveries about dopamine have huge implications for investing.
First, your brain loves long shots. The less likely or predictable a reward is, the more active your dopamine neurons become and the longer they fire--flooding your brain with a soft euphoria. "That positive reinforcement," says Schultz, "creates a special kind of attention dedicated to rewards. Rewards are what keep you coming back for more." That release of dopamine after an unexpected reward makes humans willing to take risks. Without it, explains Baylor's Read Montague, our early ancestors might have starved to death cowering in caves, and we modern investors would keep all our money under our mattresses.
The dopamine rush we get from long shots is why we play lotto, invest in IPOs, keep too much money in too few stocks and invest with active portfolio managers instead of index funds. It's why phrases like "the next Microsoft" or "the next Peter Lynch" make us whip out our wallets. Even if you've never experienced such a big score, you're wired to want them. Dopamine makes winning big feel vastly better than just winning--and the prospect of its euphoric effect prevents us from focusing on how small the odds of winning big actually are.
