The amygdala is an almond shaped mass of nuclei within the temporal lobe of the brain. It is part of the limbic systems, and is associated with fear and anxiety. It is also connected to the emotion of pleasure, although, not in a good way, more the pleasure some people find in aggression.
Loss aversion, an idea put forth in 1979 by Kahneman and Tversky, states that people feel losses more deeply than gains of the same value. In other words, people strongly prefer avoiding losses than acquiring gains.
Now, researchers at the California Institute of Technology (CalTech) have studied two patients with amygdala lesions. The results of the study were published in the journal Proceedings of the National Academy of Sciences. These patients were born with a rare genetic condition which has led to lesions on the amygdala. These patients cannot feel fear. In fact, they can’t even recognize it on someone else’s face.
These two patients and twelve people with healthy amygdala’s where tested to see whether the chance of losing affected their likelihood to gamble. It did. When people with healthy amygdala’s saw that the difference between winning and losing was smaller (they could win $20 but lose $15) or if potential losses outweighed potential gains, they wouldn’t gamble. The two patients with lesions on their amygdala’s would—even when losses outweighed the gains.
So the amygdala doesn’t only control fear, it also controls our fear of losing money.
However, the amygdala does not seem to have any control over risk aversion. People who are ‘risk averse’ are less likely to take chances even when they do not stand to lose anything.