fMRI Evidence of a Hot-Cold Empathy Gap in Hypothetical and Real Aversive Choices

Abstract

Hypothetical bias is the common finding that hypothetical monetary values for "goods" are higher than real values. We extend this research to the domain of "bads" such as consumer and household choices made to avoid aversive outcomes (e.g., insurance). Previous evidence of hot-cold empathy gaps suggest food disgust is likely to be strongly underestimated in hypothetical (cold) choice. Depending on relative underestimation of food disgust and pain of spending, the hypothetical bias for aversive bad scan go in the typical direction for goods, disappear, or reverse in sign. We find that the bias is reversed in sign-subjects pay more to avoid bads when choice is real. fMRI shows that real choice more strongly activates striatum and medial prefrontal cortex (reward regions) and shows distinct activity in insula and amygdala (disgust and fear regions). The neural findings suggest ways to exogeneously manipulate or record brain activity in order to create better forecasts of actual consumer choice.Keywords: hypothetical bias, aversive bads, fMRI, medial prefrontal cortex, amygdala, decision making, neuroeconomics INTRODUCTIONReal choices are binding consequential commitments to a course of action, like undergoing surgery or putting a down payment on a house. Researchers in all social sciences seek to understand how real choices are made. However, in studying decisions, scientists and policy makers often have to settle for measuring hypothetical statements about what people would choose, rather than observing what people actually do choose.In marketing research, for example, hypothetical surveys are used to forecast sales of existing products, to test new products by asking consumers what they would buy, and to evaluate promotions (Silk and Urban, 1978;Urban et al., 1983;Infosino, 1986;Jamieson and Bass, 1989;Green and Srinivasan, 1990;Chandon et al., 2004;Raghubir and Greenleaf, 2006;Schlosser et al., 2006). In public economics and political science, survey data are used to establish the dollar value of goods that are not traded in markets (such as clean air or the prevention of oil spills), and to poll likely voters before an election (Crespi, 1989;Diamond and Hausman, 1994;Carson et al., 1996;Mortimer and Segal, 2008). Hypothetical choices are also necessary in some types of psychology and neuroscience experiments in which measuring real choices is impractical or unethical, especially in the domain of distressing moral choices (Greene et al., 2001(Greene et al., , 2004Kühberger et al., 2002;Hariri et al., 2006;Monterosso et al., 2007).The reliance on hypothetical choice data presumes either that hypothetical choices are a good and legitimate way to forecast real choices, or that there is some knowable relationship between the two types of choices, such that the hypothetical data can be adjusted to forecast real choice data accurately.Abbreviations: WTP, willingness-to-pay; CS, consumer surplus.However, many studies in behavioral economics have shown a substantial, systematic gap: typically, hypothetical valuations ar...

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