Comparison of functional near-infrared spectroscopy and electrodermal activity in assessing objective versus subjective risk during risky financial decisions

Risk is an important factor impacting financial decisions. Risk can be processed objectively, e.g. as variance across possible outcomes of a choice option or subjectively, e.g. as value of that variance to a given individual. The aim of the present study was to test the potential of functional near-infrared spectroscopy (fNIRS) in assessing these different ways of processing risk while subjects decided between either high or low risk financial options or a safe (risk-free) option. For comparison we simultaneously measured electrodermal activity (EDA), a well-established method in decision-making research and a core measure of affective processes. FNIRS showed that lateral prefrontal cortex responses to high risk were enhanced relative to low risk only in risk-seeking individuals but reduced relative to low risk in risk-averse individuals. This is in-line with individual-specific risk processing reflecting the subjective value of risk. By contrast, EDA showed enhanced responses to high risk, independent of individual risk attitude, in-line with the notion of objective risk processing. The dissociation between the two measures arose even though they overall were equally sensitive to detect individual risk-related differences and even though there was an increased, risk attitude-independent, temporal coherence between the two measures during high-risk conditions. Our results suggest that hemodynamic responses in lateral prefrontal cortex as measured by fNIRS reflect the subjective value of risk, whereas EDA may index the objective amount of risk people are presented with. The findings suggest that fNIRS could be a useful method for studying risk behavior in financial decisions.