Animals learn not only about stimuli that predict reward but also about those that signal the omission of an expected reward. We used a conditioned inhibition paradigm derived from animal learning theory to train a discrimination between a visual stimulus that predicted reward (conditioned excitor) and a second stimulus that predicted the omission of reward (conditioned inhibitor). Performing the discrimination required attention to both the conditioned excitor and the inhibitor; however, dopamine neurons showed very different responses to the two classes of stimuli. Conditioned inhibitors elicited considerable depressions in 48 of 69 neurons (median of 35% below baseline) and minor activations in 29 of 69 neurons (69% above baseline), whereas reward-predicting excitors induced pure activations in all 69 neurons tested (242% above baseline), thereby demonstrating that the neurons discriminated between conditioned stimuli predicting reward versus nonreward. The discriminative responses to stimuli with differential reward-predicting but common attentional functions indicate differential neural coding of reward prediction and attention. The neuronal responses appear to reflect reward prediction errors, thus suggesting an extension of the correspondence between learning theory and activity of single dopamine neurons to the prediction of nonreward.

A positive relation between overconfidence and investment provision has been theoretically justified and practically assumed in the literature, but has not been thoroughly investigated. We test and confirm this positive relation between direct measures of overconfidence in one's financial knowledge and choice of investment. More precisely, strong overconfidence results in excess investment, underconfidence induces underinvestment, whereas moderate overconfidence leads to accurate investments. Our experimental results are based on different subject pools, financial professionals and students, and different media: computer-, paper-, and web-based. The degree of one's overestimation of one's individual financial knowledge relative to one's actual knowledge as well as relative to the knowledge of peers explains investment decisions better than one's actual knowledge. The relation between overconfidence and investment is robust to the degree of individual risk aversion, the riskiness of the investment projects, and to the changes in incentives structure.

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