Intelligence moderates neural responses to monetary reward and punishment.

The relations between intelligence (IQ) and neural responses to monetary gains and losses were investigated in a simple decision task. In 94 healthy adults, typical responses of striatal blood oxygen level-dependent (BOLD) signal after monetary reward and punishment were weaker for subjects with higher IQ. IQ-moderated differential responses to gains and losses were also found for regions in the medial prefrontal cortex, posterior cingulate cortex, and left inferior frontal cortex. These regions have previously been identified with the subjective utility of monetary outcomes. Analysis of subjects' behavior revealed a correlation between IQ and the extent to which choices were related to experienced decision outcomes in preceding trials. Specifically, higher IQ predicted behavior to be more strongly correlated with an extended period of previously experienced decision outcomes, whereas lower IQ predicted behavior to be correlated exclusively to the most recent decision outcomes. We link these behavioral and imaging findings to a theoretical model capable of describing a role for intelligence during the evaluation of rewards generated by unknown probabilistic processes. Our results demonstrate neural differences in how people of different intelligence respond to experienced monetary rewards and punishments. Our theoretical discussion offers a functional description for how these individual differences may be linked to choice behavior. Together, our results and model support the hypothesis that observed correlations between intelligence and preferences may be rooted in the way decision outcomes are experienced ex post, rather than deriving exclusively from how choices are evaluated ex ante.

Experience and abstract reasoning in learning backward induction.

Backward induction is a benchmark of game theoretic rationality, yet surprisingly little is known as to how humans discover and initially learn to apply this abstract solution concept in experimental settings. We use behavioral and functional magnetic resonance imaging (fMRI) data to study the way in which subjects playing in a sequential game of perfect information learn the optimal backward induction strategy for the game. Experimental data from our two studies support two main findings: First, subjects converge to a common process of recursive inference similar to the backward induction procedure for solving the game. The process is recursive because earlier insights and conclusions are used as inputs in later steps of the inference. This process is matched by a similar pattern in brain activation, which also proceeds backward, following the prediction error: brain activity initially codes the responses to losses in final positions; in later trials this activity shifts to the starting position. Second, the learning process is not exclusively cognitive, but instead combines experience-based learning and abstract reasoning. Critical experiences leading to the adoption of an improved solution strategy appear to be stimulated by brain activity in the reward system. This indicates that the negative affect induced by initial failures facilitates the switch to a different method of solving the problem. Abstract reasoning is combined with this response, and is expressed by activation in the ventrolateral prefrontal cortex. Differences in brain activation match differences in performance between subjects who show different learning speeds.