That Neuroscience Guy - The Neuroscience of Value-Based Decision Making

Episode Date: November 16, 2025

In today's episode of That Neuroscience Guy, we discuss how your brain uses your values to make decisions. 

Hi, my name is Olo Krig Olson, and I'm a neuroscientist at the University of Victoria. And in my spare time, I'm that neuroscience guy. Welcome to the podcast. So this is our second episode on human decision making. And I'm almost treating this like a class, like if you were taking a class with me. So we're going to do a run of 10 to 12 episodes. I'm still planning it out. We're going to interspers them with some stuff about the neuroscience of day life

in a couple of interviews, including one with yours truly. And hopefully you like the format for this season. So let's get on with it. Human decision making lesson two. So in the first episode in this series, I talked about the concept of human value, and I just want to review it very quickly. Remember that value is not the financial worth of something,

but it can be tied to that. All right. it's just how much something is inherently worth to you. And I use a lot of examples. You know, one I think of is I've got this hoodie I love. It's really old. It's probably not worth that much in terms of dollars and cents, but I've got a strong emotional attachment to it.

So it's this idea that something is, it's just what something is worth you. And I used a lot of food examples because, frankly, I like food. and I'll shout out a quick apology. Jen from the team said, what tofu? I love tofu. So I'm sorry if I offended all of the tofu lovers out there.

It's not just my thing. Okay, sorry. And in addition to value, I established the concept of expected value. And an expected value is just the value of something times the probability of getting something. All right. So for some decisions, this, you know, value and expected value are almost identical. If you go to buy a slice of pizza and yet we're back to pizza, the value is whatever it's worth to you.

And the expected value is 100% because you're going to get the slice of pizza. But for other choices, the concept of expected value makes more sense because let's say you decide to major in law. Well, there's a value of being a lawyer to you. it. Maybe you've watched a lot of shows on TV or you had a relative to that it was a lawyer. But what's the probability that you're going to be happy being a lawyer or that it's going to work out for you? So in some situations, value is hard to assess. An expected value is hard to assess as a result because of probabilities. And we have to do the best we can do. So that leads us to our first model of decision making. And we are going to have lots of models of decision making.

Actually, that's not entirely true. They're always going to come back to this basic idea, but what's going to happen is we're going to add to these models of decision-making, making them more and more complex. So the simplest model of decision-making is very straightforward. When faced with a decision, choose the highest expected value, or choose the highest value. It's that simple.

So you assess the choices in front of you, and you take the highest expected value. So let's just stick with food, because to be fair, I'm hungry. Let's say you go to a mall food court, and there's a variety of food choices in front of you. You know, there might be subway, there might be a sushi place, there might be A&W hamburgers. That's kind of a Canadian thing. So Burger King, for those of you that know that. So you've got these three choices.

Basically, what you do is you just go, well, what is the highest value of these to me personally at this point in time? And you just choose that. So if you really like Subway, that's what you go with. And you always choose the highest value. Now, we know that that's not what happens in real life. And we're going to get to that. But for today, we're just going to focus on this very simple model where you always choose the highest value. value. All right? And that's your model of decision making. So when you decide what you're going to

eat for your next meal, you're choosing the highest value. Now, let's just talk about a few things that come up. I'm going to deal with a lot of them over the next couple of episodes, but an obvious one is what about those situations when you're having trouble choosing? Well, basically what that means is you have two values that are very similar. All right. And if two values are similar, then it's harder to choose because you're not sure which is better A or B. And another concept to wrap your head around is the fact that value isn't constant. They change over time. You know, think of the foods that you used to love when you were younger and you might not love those same foods now because their value has changed you. So values can change over a long period of time, but they can also change

over a very short time frame. All right, as you're sitting there going sushi, You might be going, oh, Subway, oh, man, that'll taste so good. Then you think to yourself, well, so the value for Subway goes up. And then you might think to yourself, well, I am trying to eat healthier. And sushi is probably a bit healthier. So the value for sushi goes up. So values change over time. And that's how you explain these kind of deliberation points.

And at some point, you're forced to make a decision. And you choose the highest value. So back to that model. So why is it hard to make decisions? Well, that's a complex topic, but hopefully you've just learned one now, which is sometimes it's very hard to assess value. You know, for some simple decisions, you know what you want, all right, and you just take the highest value. But for the more complex decisions in life, you know, I know one that my son's thinking about right now is, you know, what should my major be at university? like what degree program should I go into?

Assessing the value of degree programs is incredibly hard. You know, you might be thinking about would I be happy with that degree? You might be thinking about what path does that degree take me on? All right, you might be thinking, how much money will I earn with that degree? And it's hard to assess those values because you don't really know. And as I mentioned yesterday, it's hard to assess probability. So when you're following this simple model of decision making, choose the highest value, it's actually incredibly challenging because you have trouble assessing value,

you have trouble assessing probability, therefore your expected values might not be 100% accurate, which makes it hard to make a decision. And that's why this system sometimes fails. All right, it's that simple. The system can fail literally because your value estimates. are off. I remember once talking to a friend who owned a restaurant and I asked them what the most popular items on the menu were. And he said, these are our top three things. And I said, well, do you have data to support that? And he goes, no, no, it's just what I've observed. You know, I'm here every

day and this is what I see. And I said, you know what you should do is you should go through your sales records and see what are the most popular items. All right, because where you put them on the menu and what you actually serve, this is a decision that you have to make. And sure enough, when he went through his records, he found out he had a misperception. He had incorrectly assessed value. All right. Incorrectly assessed probability. So when people sort of say, hey, Dr. Kay, can you give me some advice on how to make better decisions? This is what you do for a living. I actually go kind of old school with this and say, write it down. Step number one. write it down. I remember when I was in this course called Consumer Ed 10 a long time ago,

and they talked about decision making. They literally said, you know, put down decision A, put down decision B, and write down all the pluses and minuses. So, you know, I just went through this. I was thinking about where am I going to go on my Christmas vacation? And my choice was sun or snow. I wanted to either sit on a beach and surf or go snowboarding up in the mountains. And I actually did. I'm that nerdy. I wrote it down. I went sun, snow, and I wrote the pluses and minuses of both. All right. And that's a great way to try to get better at assessing value and probability, all right, is just to write it down. Another thing to do is, and this is sort of encapsulated in what I just said, is to think about it, actually spend a bit of time thinking about your decision. You know, we're going to get to gut-hunch decision-making. We've talked about it in the past. But at the end of the day,

when you make a gut hunch decision, you generally are going with the highest value option, but you might not be. So take some time to assess value and make sure you are making the best choice possible. Really important to do. And the other thing that makes kind of common sense if you think within this model is you need to gather information. You know, the example I like to use here is I just move. move to Portland. I told you that last episode. And the very first night here, I went out for pizza,

shock. And it's this place called the Life of Pie. It's on 23rd Avenue in Portland. If you're ever in Portland, go to the Life of Pie. It's unbelievable. But every time I got pizza, I got it from there. And that's actually, you know, there's the decision-making expert making a critical mistake. Because what if there's another good pizza place out there? And it turns out there's a lot of good pizza places. Still think life of pie is the best, but you have to gather information. In this case, you try a lot of pizza from different pizza places because that way you have a better assessment of value because maybe that life of pie place wasn't the best pizza in Portland. There's better pizza out there, but unless you gather information, you don't know. So how do you make better decisions

with the simple model? Write it down. Think about it. Try and come up with accurate assessments of value and accurate assessments of probability so you can better compute expected values. And as a part of that, you're gathering information. You need to figure out how the world works. So there you have it. It's a quick one, but I just want to get this fundamental model down. And we'll call this our base model of decision making, and it's very straightforward. Always choose the highest expected value. Or that's what you do. is you choose the highest expected value. On our next episode,

we'll start talking about, well, why shouldn't you always choose the highest value? Because we're going to cover something called the Explore-exploit dilemma. All right, that's all I've got on decision-making. Second episode in the series. Don't forget the website,

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