System Neglect and the Neurocomputational Substrates for Over- and Underreactions to Change

Abstract

AbstractThe world constantly changes, with the underlying state of the world shifting from one regime to another. The ability to detect a regime shift, such as the onset of a pandemic or the end of a recession, significantly impacts individual decisions as well as governmental policies. However, determining whether a regime has changed is usually not obvious, as signals are noisy and reflective of the volatility of the environment. We designed a novel fMRI paradigm that examines a stylized regime-shift detection tasks. Human participants showed systematic over- and underreaction: Overreaction was most commonly seen when signals were noisy but when environments were stable and change is possible but unlikely. By contrast, underreaction was observed when signals were precise but when environments were unstable and hence change was more likely. These behavioral signatures are consistent withsystem neglect, the tendency to respond primarily to signals and secondarily to the system that produces the signals. We found that system neglect arises from dissociable patterns of selectivity in two distinct brain networks. Whereas a frontoparietal network (FPN) selectively represented neglect of signal noise but not environment volatility, the ventromedial prefrontal cortex (vmPFC) showed the opposite pattern. These results suggest that network-level parameter selectivity is a general organizing principle in understanding how individuals make sense of unstable environments.