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DR@W forum: Tali Sharot (University College London)
Tali Sharot (University College London)
Why humans discount bad news (or asymmetric belief formation)
Humans display an aversion to learning from bad news, discounting the strength of the evidence. In contrast, when the information is favorable people effectively incorporate new information into existing beliefs in a Bayesian manner. This phenomenon has important societal implications, potentially contributing to the generation of financial market bubbles and ill preparedness in the face of natural disasters. How can good and bad news have such different impacts on belief formation? Our neuroimaging results reveal that the tendency to discount bad news, while adopting good news, is related to a failure of distinct frontal regions (including the IFG and MPFC) to code for negative errors. This failure is absent in depressed individuals. Furthermore, we show that the ability to learn from negative information can be selectively improved (using TMS and/or psychological stress) or disrupted (using L-DOPA) and has a different developmental trajectory to that of learning from positive information. Together, the findings suggest that the biological mechanisms for processing favourable and unfavourable information can be differentiated. The volatility of the latter may lead to the creation of positively biased beliefs.