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Current neurobiological models of adolescent decision-making suggest that heightened risk taking during adolescence is a result of the asynchronous development of neural regions underlying cognitive control and reward processing, particularly during periods of heightened social and affective arousal (e.g., Casey, Getz, & Galván, 2008; Steinberg, 2008). Despite the emphasis on the interplay of cognitive and emotional processes during adolescence, the developmental literature has largely overlooked the potential importance of maturational changes in the anterior insular cortex (AIC), a region known for its role as a cognitive-emotional hub. In a recent review we proposed a theory of adolescent risk-taking in which development of the AIC, and its connectivity to other regions, biases adolescents towards engagement in risky behaviors (Smith, Steinberg, & Chein, 2014b). The current studies provide a test of the proposed model through an examination of specific aspects of AIC development and functioning, including the trajectory of structural development within the AIC, the role of AIC engagement in adolescents' risky decision-making, and the impacts of affective arousal on AIC recruitment. Results from Study 1 suggest that the AIC exhibits continued developmental changes during adolescence that likely affect its involvement in cognitive processes. Using a risk-taking task, Study 2 demonstrates the flexible role of the AIC during adolescent decision-making and explores how affective arousal biases the AIC towards engagement in risky behaviors. Implications for both the proposed model and the developmental literature are discussed. / Psychology

Individuals with borderline personality disorder (BPD) and high levels of BPD traits have demonstrated greater rates of engagement in risky, self-destructive behaviors compared to healthy controls. Specifically, impulsivity has been theorized to underlie many of these risky behaviors. Although existing self-report literature suggests that individuals with BPD are more impulsive than controls, evidence from behavioral measures remains inconclusive. Likewise, there is scant research examining specific domains of impulsivity associated with risky behaviors in BPD, which is problematic given that impulsivity is a diagnostic criterion for BPD. Thus, the proposed research aims to bridge this gap in the literature by examining associations between BPD traits and domains of impulsivity (e.g, urgency, lack of premeditation, lack of perseverance, and sensation seeking), using behavioral measures. Findings suggest that urgency prospectively predicts risky behaviors one-month post assessment. However, contrary to our hypotheses, BPD traits were not significantly associated with any specific impulsivity domain. Additionally, results did not support the notion that impulsivity domains account for the association between BPD traits and future engagement in risky behaviors. Future directions for examining how emotion dysregulation and interpersonal difficulties in BPD relate to impulsivity and risky behaviors are discussed.

Economic preferences are fundamental to risky decision making and other economic decision- making. Unlike traditional economics, which routinely assumes that individuals are endowed with stable preferences and try to maximize the expected utility when facing risky decision-making problems, behavioral economics and neuroeconomics offer research strategies that help us explore the factors that influence economic preferences and risky decision-making process. This dissertation consists of three essays studying the underlying experiential influences on economic preferences and neurobiological effects on risky decision making. Chapter 2 examines whether experiences during adolescence have a long-term effect on economic preferences. Between 1966 and 1976, China's Sent-Down Movement required seventeen million urban teenagers to spend several years living and working in rural areas. The program had a number of goals for participants, including learning empathy for rural laborers and developing collectivist values. The sent-down movement can be regarded as a natural experiment, which allows us to investigate whether this government policy was successful in effecting a lasting change to economic preferences. Using a modified Global Preference Survey and employing a regression discontinuity design, we find that the experience of being Sent-Down significantly changed participants' risk preferences, other-regarding preferences, and attitudes toward government. Chapter 3 explores how the arousal system modulates attention and investment behavior. Experimental research shows that human decision making is shaped by emotions associated with an outcome's success or failure. Regret, for example, is a powerful predictor of future investment decisions in asset markets. Using a fictive learning model to capture regret, we examine changes in pupil diameter of participants performing a sequential investing task. By manipulating task uncertainty, we show that pupil dilation is positively correlated with both asset price variance and regret. In addition, pupil linked arousal is positively associated with the learning rate. We conclude that the pupil–linked arousal system helps regulate investment behavior in a dynamic market environment. Chapter 4 explores the complex process by which people make risky choices. While traditional models, like expected utility theory, model choice as the selection of the outcome with the highest probability-weighted value, research shows that in some environments these models do a poor job of describing behavior. This study explores the role of attention, pupil-linked arousal, and salience in risky choice. First, we replicate earlier findings that those choices are consistent with expected utility theory when the calculation is easy, however, as the calculation becomes harder, they make decisions by comparing unweighted payoffs and are attend to the salient option. Further, we find that pupil-linked arousal is associated with the level of cognitive effort needed to calculate expected utility. Finally, we show that arousal reflects cognitive effort associated with resisted selecting a more salient option. / Doctor of Philosophy / Economic decisions are those involving trade-offs where an individual must give up one item or possibility to get another. Economic preferences define which outcome an individual will value more, and helps explain why, for example, some people invest their money in high-risk and high- yield bonds while others keep their money in their savings account. Economists and other social scientists are interested in the differences between individuals' economic preferences, how they are formed, and how they translate into peoples' decisions. Risky decision making is one common type of economic decision that people make daily, for example, investing in the stock market, gambling in casinos, buying lottery tickets or trying a new restaurant. We know that when two people make different decisions that sometimes it is because they have different preferences, and sometimes it is because they go about making decisions in different ways. This dissertation explores whether people's early experiences have a long-term impact on economic preferences (Chapter 2), and investigate the roles that attention, emotional arousal, and information salience play in risky decision making (Chapters 3 4) using research methods from behavioral economics, experimental economics, and neuroeconomics. The scientific mission of this dissertation is to deepen our understanding of how and why people make choices. We add to the evidence that economic preferences are not inborn and stable; instead, they are shaped by people's experiences. We also explore risky choices like investing money and find that while people often try to minimize regret, our emotional arousal system significantly affects our attention patterns and behavior. In addition, when faced with decisions requiring calculations that are hard to do in your head, people make different decisions than when the calculations are easy. Overall, we paint a picture of human decision-makers whose past experiences and current options determine both the nature of their choices and how they make them.

Adolescence is a critical developmental period characterized by neurobiological changes and exposure to novel experiences. According to the Center for Disease Control, approximately 70% of adolescent deaths in the United States are due to risky behaviors such as reckless driving and risky sexual behavior (Kann et al., 2016). In order to better understand what drives adolescent risk-taking, the current studies utilized an interdisciplinary approach, which combined behavioral economic models and functional magnetic resonance imaging (fMRI) to understand neurobehavioral mechanisms of risky choice. The focus of the current studies is to investigate the extent to which neurobehavioral mechanisms of risky choice change across adolescence, and to identify individual differences that explain real-world risky behavior. In Study 1, we show that behavioral sensitivity to risk and neural correlates of risk processing change across a critical period of adolescence. Importantly, our results indicate that individual differences in neural, not behavioral risk sensitivity are predictive of future engagement in health risk behaviors. In Study 2, we examined the relation between inter-individual differences in adolescent expectations of valued rewards and self-reported risky behavior using an adapted behavioral economic model. Implications and future directions for adolescent risky decision-making are discussed. / Ph. D. / According to the Center for Disease Control, approximately 70% of adolescent deaths in the United States are due to risky behaviors such as reckless driving and risky sexual behavior (Kann et al., 2016). In order to prevent and reduce such risk-taking behavior during adolescence, it is essential to improve our current understanding of the mechanisms contributing to risky decision-making. One promising mechanism that may be critical in guiding adolescents either toward or away from risky behavior is the extent to which adolescents are sensitive to the risk or likelihood of receiving potential rewarding outcomes. To this end, the current work leveraged the used of a longitudinal design with an interdisciplinary approach that combined the use of behavioral economic models, functional magnetic resonance imaging (fMRI), and developmental psychological theory to better understand how adolescents develop risk sensitivity at both the behavioral and neural levels. Importantly, our results in Study 1 indicated that individual differences in neural, not behavioral risk sensitivity are predictive of future engagement in health risk behaviors. In Study 2, we used an adapted behavioral economic model to identify individual differences in adolescent expectations of valued rewards, and assess the relation of these differences to self-reported risky behavior. This research illuminates the critical role that neurobehavioral risk sensitivity might play during risky decision-making, which may have implications for the prevention and amelioration of adverse health risk behaviors.

The inexorable rise of mobile money innovation has led to huge changes in consumption and saving decisions for many households across developing economies. With this background, we use the Ghana Socio-economic Panel Survey (GSPS) data to explore the relationship between mobile money usage and household consumption and savings decisions. Firstly, we develop a framework in which mobile money shifts the budget constraint of households through the transaction cost and remittances in a dynamic setting. Secondly, we show through our empirical results that mobile money promotes household consumption, concluding that the payment convenience of mobile money improves household income by reducing transaction costs and enhancing remittance receipt, thereby promoting consumption growth. A heterogeneity analysis showed that households with larger assets, higher income, relatives overseas, residing in high-income regions, and low financial literacy experienced larger facilitating effects of mobile money on consumption than their counterparts. Meanwhile, households with fewer assets, lower income, no relatives abroad, lower financial literacy, and lower-income regions experience a greater facilitating effect of mobile money savings. Regarding consumption structure, mobile money innovation mainly promoted non-recurring household expenditures rather than recurring ones. Further analysis of consumption categories shows that medical care expenses, communication, food, and fuel expenditures are among the most affected household expenditures by mobile money use. In chapter 2; Given that monetary policy works on the interface of financial systems, fintech innovations can lead to an instability of the money demand function which affects the price level or aggregate spending and consequently, inflation. Therefore, mobile money innovation impacts not only household finance and consumption but also has monetary effects, especially on inflation and real growth. We investigated the impact of mobile money innovation on monetary policy; namely the stability of the money demand function, and output gap using panel data from 44 developing countries and the Generalized Method of Moment Technique. First, we show that there is a weak negative association between the trend of mobile money and the income velocity of money. Further analysis found a positive and statistically significant impact of the innovation on the output gap and a negatively significant effect on the money demand function. We conclude that there are countervailing effects where mobile money lowers transaction costs, improves productivity and economic efficiency, and increases output, resulting in a lesser inflationary effect. In Chapter 3; we show although numerous studies have examined the crowding-out effect of housing on portfolio choice via the house price risk channel and the liquidity constraint channel, separate analyses distinguishing risky asset choices and drawing a distinction between committed and non-committed mortgage payment under homeownership types has received less attention. We investigate the heterogeneous impact of homeownership type on risky asset choice using the 2021-2022 Survey of Economics and Household Decision-making. First, we show that homeowners with mortgage debt are less likely to participate in the cryptocurrency market compared to the stock market indicating that the higher risk associated with “speculative assets” likely induced homeowners with mortgage debt to adopt a more cautious approach to selecting their risky portfolio. The debt component separating homeowners becomes even more compelling when the risk level between assets varies significantly larger, and the agents’ incomes are lower than a certain threshold. However, changes in housing market conditions significantly change the temperance exhibited by homeowners towards risky asset selection. We further decomposed the effects across age groups, risk profiles, and income groups. In addition, we examined the crowding-out effect of house prices and liquidity constraints associated with homeownership as compared to renting. The empirical evidence shows that homeowners are less likely to participate in both the stock market and the cryptocurrency market as compared to renters due to house price risk and liquidity constraints associated with homeownership.

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