In a famous experiment in the 1950s, scientists planted electrodes in the brains of rats, enabling them to self-administer pleasurable sensations by pressing a bar. If allowed, the rats would stimulate an area called the nucleus accumbens to the exclusion of all other activities, passing up opportunities to eat, drink or even have sex. They did it until they fell over.
Stupid rats, right? But we humans also have a nucleus accumbens, and it can take over our lives, too. If we let it, it can lead us into financial ruin. That's what happened recently to Jerome Kerviel, the junior trader at the French bank Société Général. In December, his risky bets turned a $2 billion profit. "That produced a desire to continue," Kerviel told prosecutors. "There was a snowball effect." By the time his risky investments came undone in January, Kerviel had lost the bank $7.2 billion. The trouble with chocolate cake
What was going on in his mind? And what goes on in yours? Look inside the brain
Think of the nucleus accumbens as appetite central. It's part of the primitive brain, and it has evolved to light up and get us moving forward at the sight of almost any kind of reward. It doesn't matter whether it's a piece of chocolate cake, a BMW M5 sports car, Scarlett Johansson in a party dress or a stock that gets the kind of hype Enron used to enjoy. All of them produce a surge of the neurotransmitter dopamine, and that makes the nucleus accumbens do the shimmy.
So far, so good. The problem, however, is that an activated nucleus accumbens can make boneheaded investments seem brilliant.
Researchers Brian Knutson of Stanford University and Camelia M. Kuhnen of Northwestern University's Kellogg School of Management put test subjects in an MRI machine and watched their brains as they worked through simple investment choices -- whether to buy a bond, which paid $1 every time with no risk, or either of two stocks, which could earn or lose the test subject up to $10 per turn. The researchers randomly made one stock more likely to win and the other more likely to lose, and as in the real stock market, test subjects had to figure out which stock was the winner.
The results? Seconds before making a risk-averse decision -- choosing the bond -- test subjects showed greater activation in the anterior insula, an area of the brain associated with anxiety and pain. On the other hand, before making a risky decision -- choosing a stock instead of the bond -- test subjects showed greater activity in the nucleus accumbens.
The co-authors say that when this reward center gets fired up -- for instance, after a stock-market killing -- it can increase greediness for future gains and encourage individuals to take excessive risks. That may be why so many of us fall into losing behaviors like