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research article

Markowitz in the brain?

Preuschoff, Kerstin
•
Quartz, Steven
•
Bossaerts, Peter  
2008
Revue D'Economie Politique

We review recent rain-scanning (fMRI) evidence that activity in certain sub-cortical structures of the human brain correlate with changes in expected reward, as well as with risk. Risk is measured by variance of payoff, as in Markowitz' theory. The brain structures form part of the dopamine system. This system had been known to regulate learning of expected rewards. New data show that it is also involved in perception, of expected reward, and of risk. The findings suggest that the brain may perform a higher-dimensional analysis of risky gambles, as in standard portfolio theory, whereby risk and expected reward are considered separately. That is, the human brain appears to literally record the very inputs that have become a defining part of modern finance theory.

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Type
research article
DOI
10.3917/redp.181.0075
Web of Science ID

WOS:000256212300007

Author(s)
Preuschoff, Kerstin
•
Quartz, Steven
•
Bossaerts, Peter  
Date Issued

2008

Published in
Revue D'Economie Politique
Volume

118

Start page

75

End page

95

Subjects

neurofinance

•

neuroeconomics

•

decision making under uncertainty

•

Markowitz

•

portfolio theory

•

dopaminergic

•

system

•

Dopamine Neurons

•

Uncertainty

•

Decision

•

Reward

•

Risk

•

Fmri

•

Probability

•

Hypothesis

•

Cortex

Peer reviewed

REVIEWED

Written at

EPFL

EPFL units
SFI-PB  
Available on Infoscience
November 30, 2010
Use this identifier to reference this record
https://infoscience.epfl.ch/handle/20.500.14299/61369
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