It has long been assumed in classical theories of economics that people act entirely rationally when taking decisions. However, it has increasingly become recognized that humans often act irrationally, as a consequence of biasing influences. For example, people are strongly and consistently affected by the way in which a question is presented. An operation that has 40 per cent probability of success seems more appealing than one that has a 60 per cent chance of failure.

In the study, published in the journal Science, UCL researchers used a gambling experiment to establish the cognitive basis for rational decision-making. The goal of the task was to accumulate as much money as possible, with the incentive of being paid in real money in proportion to the money won during the experiment. Participants were given a starting amount of money (£50) at the beginning of each trial. They were then asked to choose between either a sure option or a gamble option (where they would have a certain chance of winning the entire amount, but also of losing it all). Subjects were presented with these choices under two different frames (i.e. scenarios), in which the sure option was worded either as the amount to be kept from the starting amount ("keep £20"), or the amount to be deducted ("lose £30"). The two options, although worded differently, would result in exactly the same outcome, i.e. that the participant would be left with £20.

The UCL study found that participants were more likely to gamble at the threat of losing £30 than the offer of keeping £20. On average, when presented with the "keep" option, participants chose to gamble 43 per cent of the time compared with 62 per cent for the "lose" option. Furthermore, there was a marked difference in behaviour between participants. Some people adopted a more rational approach and gambled more equally and consistently under both frames, while others showed a real aversion to risk in the "keep" frame while at the same time displaying high risk-seeking behaviour in the "lose" frame.

Brain imaging revealed that the amygdala, a region thought to control our emotions and mediate the 'fight or flight' reaction, underpinned this bias in the decision process. Moreover, the UCL study revealed that people with more rational behaviour had greater brain activity in the prefrontal cortex, a region known to be involved in higher-order executive processes, suggesting that their brains are better able to incorporate their emotions into a more balanced reasoning process.

Mr Benedetto de Martino, of the UCL Institute of Neurology, says: "It is well known that human choices are affected by the way in which a question is phrased. For example, saying an operation carries an 80 per cent survival rate may trigger a different response compared to saying that an operation has a 20 per cent chance of dying from it, even though they offer exactly the same degree of risk.

"Our study provides neurobiological evidence that an amygdala-based emotional system underpins this biasing of human decisions. Moreover, we found that people are rational, or irrational, to widely differing amounts. Interestingly, the amygdala was active across all participants, regardless of whether they behaved rationally or irrationally, suggesting that everyone experiences an emotional reaction when faced with such choices. However, we found that more rational individuals had greater activation in their orbitofrontal cortex (a region of prefrontal cortex) suggesting that rational individuals are able to better manage or perhaps override their emotional responses."

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• Consumer Behavior
• Psychology
• Neuroscience
• Perception
• Intelligence
• Behavior

• Anchoring bias in decision-making
• Illusion of control
• Macroeconomics
• Cognitive dissonance
• Milgram experiment
• Attribution theory