"Most people would prefer to bet on the known fair coin, even though you can say for all objective reasons it's the same as if you chose the biased, unknown coin," Hsu said. "There has been a lot of work in the last 30 years, generalizing this notion to explain this behavioral aversion to what's called ambiguity to real-world phenomenon."
As an example, Hsu pointed to financial investments. Since stocks are seen as riskier than other investments such as government bonds, investors expect high returns - more risk, more reward - but they are more likely to take that risk than, for example, the ambiguity of investing in an unfamiliar country.
"If you are investing in a stock market, would you rather invest in your home country, in U.S. stocks, or would you rather diversify all over the world," Hsu said. "If you diversify all over the world it's a good thing because every banker says you should diversify your portfolio. But of course people don't do that, people invest overwhelmingly in their own country. One of the explanations is that people have this ambiguity aversion and invest in their own country because they feel like they know more about it and they feel like it's just safer, even when it's actually not a good thing to do."
The topics of risk/reward and equity that Hsu explores are intimately related to our brains' evolutionary heritage. Risk/reward factors that have developed in humans and other animals over thousands of years while foraging for food or keeping an eye out for predators are deeply ingrained and play roles in decision-making for all sorts of things. Hsu said studying those factors through fMRI simply adds to our knowledge of how and why people make choices.
"People respond to incentives; I don't think you'll find any kind of behavioral economist or neuroeconomist who will disagree with that," Hsu said. "We know that institutions matter, we know that social behavior matters. It's really about the way that the brain implements (behaviors) and how social institutions change those behaviors. So a lot is filling in a more complete picture of how people actually make decisions."
Hsu believes there is plenty of room to explore these issues at his new home, including in an area that several Beckman psychology researchers focus on: the aging mind.
"One of the nice things about the University of Illinois is that there is a very strong aging group here," he said. "When people are saving for retirement those (topics) are things that we know people are extremely biased for in their actual decision- making. I think part of the reason is that evolution has designed us to just not think about what is going to happen when we're 80 years old.
"So there is a lot of work in what kind of decision processes lead to under-saving by older people and how we can change the framing of the problem to get them to save more and what kind of therapies you can use to get very old people to improve their decision-making."
Despite being a researcher who has yet to start his faculty career, Hsu is already crossing disciplines from psychology to economics to philosophy and earning national recognition.
"These are questions that every notable philosopher has asked since basically the beginning of philosophy," he said. "To the extent that you can bring some new ideas into it, people are interested."
"Christine", one of Ming Hsu's subjects in a moral decisionmaking experiment. Image courtesy WNET Thirteen.
The choices required of test subjects in Ming Hsu's moral decision-making experiment were not easy, according to several of the study's subjects. The PBS show Curious, produced by WNET Thirteen in New York, followed Hsu and his fellow researchers as they ran test subjects through a headscanner and asked them to make decisions about donating to a children's home. Hsu explains the rationale behind the tough moral dilemma for subjects at the heart of the experiment in this behind-the-scenes clip.
Watch an online version of the Curious episode, titled Mind, Brain, Machine.