Evaluation of Probabilities and Brain Activity - An EEG-Study - Brain Informatics - page 82

peak than categories further away from this center position, which is specifically
category C+300 in the lottery condition. Thus, this stimulus induces a very high atten-
tion. Since in this category the sure payoff seems to be very attractive compared to the
offered lottery, this potential could reflect the attractiveness of money or a pleasant
surprise concerning the following sure payoff. Comparing this result with other EEG
studies [20-22] analyzing the role of the P300 in connection with monetary reward,
the argument that high attractive payoffs induce a higher P300 is reasonable.
The statistical analysis of the behavioral data shows no difference between the re-
sults of the CE method and the bisection method. It can be assumed that the perceived
center of 'joy' equals the certainty equivalent, accordingly. Hence, the
utility of both is

and not . There is no evidence
that probabilities in risky choices are underweighted, as reported in some experimen-
tal or empirical papers on Prospect Theory. The EEG data shows no different atten-
tion on both methods at the presentation of risk. Thus, a distinct process of probability
weighting or risk evaluation cannot be found for a probability of 0.5. Following the
discussion in section 1.3 on modeling the evaluation of probabilities it can be con-
cluded that these results are consistent with economic theories, like Expected Utility
Theory or a special form of Prospect Theory with w(0.5)=0.5, in which no probability
weighting of a probability of 0.5 is postulated.
Further experimental studies using EEG or fMRI techniques combining the
bisection method and the CE method seem to be very promising to shed light on the
phenomenon of probability weighting of probabilities that are different from 0.5.
Economic models and models of mental processes can be subject to further tests by
using these two methods.

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