Mathematical Biology Seminar

Peter Bossaerts
Department of Finance, University of Utah

Human reaction to extreme events and its biological foundations

Friday, September 19 , 2014, at 3:05pm
LCB 219

The talk will discuss recent work on how humans react to extreme events. A deeper understanding of human reactions requires proper definition of an extreme event (linking it to the concept of an outlier in statistical analysis) and its nature (distinguishing between leptokurtic and platykurtic settings, and whether the outlier is transient or reflects more persistent changes). Evidently, the noradrenergic system in the human brain provides crucial support for tracking outliers, while signals in the anterior insula allow humans to distinguish between transient and fundamental outliers. Overall, human reaction to outliers that signal fundamental changes is better adapted than reaction to transient outliers. The latter type of outlier is ubiquitous in modern large-scale social institutions, however, such as financial markets, internet and air traffic.