The Expert's Opinion Bias

The tendency to overvalue the opinion of experts and undervalue our own ability for making wise decisions.

With hindsight, the causes of the current global financial meltdown seem obvious, even predictable. Now, brain imaging offers one explanation for why so few investors challenged foolhardy fiscal advice. Our brains raise few objections when presented with seemingly expert guidance, new research suggests.
"Most average people have this tendency to turn off their own capacity for making judgments when an expert comes into the picture," says Gregory Berns, a neuroeconomist at Emory University in Atlanta. 
Berns' team presented 24 young volunteers with a simple choice: accept a sure payment or bet on a riskier, yet higher-paying lottery. When weighing this decision, volunteers activated brain circuits known to calculate risk and reward. In line with previous research, the team noticed more brain activation in these dopamine-delivering areas when the expected reward was higher.
"When advice is not there, when people are making these judgments on their own, you can make clear correlations with expected value in the lottery and areas associated with the dopamine system," he says.
To see how subjects respond to financial advice, the team told volunteers that Charles Noussair, an economics professor at Emory who advises the US Federal Reserve, would offer his opinion on whether they should accept the easy money or take a chance.

In reality, a computer program told volunteers to accept the sure thing if it added up to about 20% or more of the lottery sweepstake. Volunteers usually took this advice blindly, brain scans suggest. Correlations between increased potential reward and brain activity disappeared when volunteers received the advice.
"That suggests that the normal mechanisms people use to evaluate risk and reward are not being used when you have an expert telling you what to do," Berns says. "I think this explains a lot, if not everything, about the current market situation," he adds, urging people to take expert advice—fiscal, medical or otherwise—more shrewdly. "In my opinion, decision-making shouldn't be handed over to anyone, expert or otherwise."
Reference: New Scientist magazine, 24 March 2009; "Brain quirk could help explain financial crisis" by Ewen Callaway.