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Neuronal coding of economic risk: From behavioural theory to action potentials

Behavioural economic theory has long since claimed that decision makers are sensitive to the statistics of available options, namely the expected value (mean) and the risk (variance). Moreover, decision makers distort these statistics, resulting in utility functions that represent the subjective values assigned to options. I will provide evidence showing that the statistics of risky options, and the subjective distortions of these statistics, are indeed represented in the brains of decision makers at the level of individual neurons. I propose that this neuronal activity is a physiological nexus where the processing of external, environmental information is combined with internal, subjectively derived signals.