The Basic Idea
You and your friend are going out to dinner one night, and she offers to drive you to the restaurant. You are a little nervous as she is a pretty reckless driver, but agree anyway to be polite. The second she gets behind the wheel, she starts driving erratically, at one point crossing three lanes of traffic to pull a last-minute right turn. On a stretch of straight road, she goes 20 miles per hour over the limit, and in a split second, you see police lights behind her. She sighs and pulls over, exclaiming, “This is my third speeding ticket this month!”
You can’t wrap your head around why she hasn’t gotten a hold of her behavior throughout the years you’ve known her. As the officer looks at her license and registration, you mentally review her pastimes, including gambling and skydiving. Why does she do these things if it puts herself and others in danger? The answer is that she is engaging in risk-seeking behavior, which is defined as engaging in activities that put oneself at risk, either consciously or unconsciously.
Theory, meet practice
TDL is an applied research consultancy. In our work, we leverage the insights of diverse fields—from psychology and economics to machine learning and behavioral data science—to sculpt targeted solutions to nuanced problems.
Prospect theory: Proposed by Daniel Kahneman and Amos Tversky, this theory purports that we generally prefer to avoid a potential loss than risk a potential gain. It also suggests that we choose scenarios that provide certain outcomes since we’re naturally risk-averse.
Regulatory focus theory: In the context of people’s decision-making processes, this theory evaluates peoples’ motivations and how they relate to the way people go about achieving their goals.
Hyperbolic discounting: Our preference of choosing immediate rewards over future rewards, even when those future rewards are larger.
Risk aversion: This term refers to an inclination for a guaranteed outcome rather than a gamble with an outcome of equal or higher expected value.
Loss aversion: Loss aversion describes the phenomenon of the pain from loss being more emotionally salient than the satisfaction of winning. In other words, it’s more distressing to lose $5 than it is to gain $5.
In 1979, Daniel Kahneman and Amos Tversky published their first paper on prospect theory and decision-making under risk. While it wasn’t the first paper to investigate risky behavior, it has been one of the most influential and is responsible for increasing awareness and understanding of this behavioral tendency. Three key premises emerged from that paper:
- The first premise, known as prospect theory, is that the status quo is used as a reference point from which we evaluate choices.1
- The second premise is the idea of loss aversion, where the pain of losing is more emotionally salient than the satisfaction of winning.1
- The two premises above help to explain the third and final premise: that people are risk-averse with respect to gains but risk-seeking with respect to losses.1 In other words, people prefer lower risks when it comes to gambles that could move them forward from the status quo. On the other hand, when they already feel that they are losing ground and that the status quo is threatened, people would rather take higher risks in the hopes of avoiding that loss.
Many theories and research studies appeared on the topic in the years following Kahneman and Tversky’s famous paper. However, much of these only focused on single determinants of behavior, which do not reflect the real-life scenarios under which we make decisions. Citing studies whose findings refuted that of Kahneman and Tversky’s 1979 work, research duo Sitkin and Pablo proposed a new risk behavior model in their 1992 paper.2 This novel framework stresses the importance of risk propensity - the degree to which someone is willing to take a risk, which they argue has been overlooked. Including this variable will contextualize previous research, of which they debate that “variation[s] in perceptions of situational risk were confounded... with risk propensity.2” Sitkin and Pablo’s widely-referenced article changed the dialogue on risk behavior and pushed it toward being inclusive of multiple variables and embracing more realistic scenarios for analysis.
One such examination came nearly twenty years later, in 2010, and investigated how risk-seeking behavior can be altered after significant losses and shaped by the status quo. Regulatory focus theory guided this team’s investigations and is defined as the relationship between one’s motivation and how they go about achieving a goal. Notably, there are two motivational systems within this framework: the promotion system (focused on hopes and gains) and the prevention system (focused on safety and responsibility).3 Findings from four studies found that people are more motivated to choose a risky option under three conditions:
- When an individual is in a state of loss
- When an individual has a prevention-focused regulatory state (rather than promotion-focused)
- When only the risky option provides the opportunity to mitigate the loss3
Importantly, they also found that prevention motivation was associated with behaviors related to maintaining the status quo after a loss. A similar study in 2013 used the Australian floods in Brisbane as a measure of significant loss and found that individuals exhibited more risky behavior after losing their home to the flooding, thus providing support for prospect theory and stressing the significance of the status quo. Similar to previous studies, there were no substantial differences in personality characteristics between homeowners across the flood line.4 After these floods, “affected individuals who faced a substantial negative shock in wealth were approximately 50% more likely to accept a gamble than their immediate neighbors who remained unaffected.”4
In the context of these previous studies, we can better understand all that goes into risky behavior concerning the COVID-19 pandemic. Risky behavior includes not wearing a mask, not getting vaccinated, or not respecting social distancing guidelines. Why has compliance been inconsistent? A survey conducted between September and December 2020 revealed that hyperbolic discounting, risk perception and risky decision-making predicted a surprising 55% of the variance in healthy mask-wearing practices.5 A second study emphasized the importance of risk perceptions as related to behavioral responses. It concluded that risk attitudes, rather than actual risk, affected preventative behaviors such as mask-wearing and staying home.6 Furthermore, regions that have been historically less risk-tolerant quickly changed their behavioral patterns to be COVID-safe, whereas areas with more risk-seeking people exhibited fewer protective behaviors.6
Dr. Kahneman is an Israeli psychologist and economist, most well-known for his work in judgment, behavioral economics, and decision-making. He has numerous accolades, including the Nobel Peace Prize in Economics, which he earned in 2002, and the Presidential Medal of Freedom, which he was awarded in 2012 by then-President Barack Obama.
A frequent collaborator of Kahneman until he died in 1996, Dr. Tversky was a cognitive and mathematical psychologist who focused much of his work on understanding risk. He was a recipient of the MacArthur Fellowship in 1984, and in 1985, he was elected to the National Academy of Sciences.
Not surprisingly, the consequences for risk-seeking behavior range widely, from financial success and fame to loss of health or family. Some of the most famous examples of positive outcomes to gutsy behavior include Steve Jobs. He dropped out of school to work as a video game designer at Atari, traveled to India to study Buddhism, and co-founded Apple. As we can see, he was a risk-taker throughout his whole life. Upon returning home after a pilgrimage to India, most people do not go on to start a company that changes the world entirely. While this risk ultimately paid off, he practiced other risky behaviors, including frequent LSD and marijuana use. At the beginning of his pancreatic cancer journey, he also tried to treat his illness with diet instead of surgery. Given that pancreatic cancer is one of the most quickly-developing cancers, he bet his life and precious time on a treatment that had precarious outcomes at best.7
While Jobs’ gambles generally all paid off phenomenally, at a high level, most people who exhibit risky behavior frequently struggle with negative consequences, from loss of friendships or addiction to premature death. However, since Kahneman and Tversky’s influential 1979 paper, research into what drives risky behavior has created a space of increased empathy and understanding. We all know someone prone to engage in harmful behavior. Creating dialogue to understand better why they do what they do can reduce stigma and help them find support to reduce the frequency of these behaviors ultimately.
Is risk-seeking behavior tied to certain personality traits, or is it a consequence of one’s upbringing? Results have varied: in support of the influence of personality traits — some researchers found that anxiety negatively correlated with risk-seeking, while anger and depression had a positive relationship.8 Another study found that lower scores in agreeableness and neuroticism were associated with higher risk-taking.9
On the other hand, an investigation into risky adolescent behavior revealed the importance of home life, specifically related to parental education or drug use, and the age at which sexual initiation occurred.10 The research team found that early sexual initiation, in addition to poorly educated parents or a disjointed family structure, is associated with adverse outcomes in adulthood. However, they stress that correlation does not equal causation and that the presence of these factors does not mean one is destined for a rough life.10
An article from a decade later supported and built upon these findings. It looked at how peer groups, school, race and ethnicity, community, and technology influence risky behavior at a young age. It ultimately found that each factor provides immense opportunities for positive and negative results.11 Specifically, though, dysfunctional families and social media use were most likely to harm adolescents, contributing to the likelihood of risk-taking behavior.11 Out of this controversy, future research will inform our comprehension of what creates risky behavior and how your friend could, over time, become a more safe driver.
Case Study #1: Squid Game
In September 2021, the world was rocked by the popularity of Squid Game, a Netflix show based in Korea. It is the streaming platform’s most-watched show to date, even surpassing 2020’s Bridgerton.
The show follows along as characters compete in a series of fatal games to win ₩45.6 billion (roughly $38.5 million USD). Starting with 456 players and ending up with one winner, the series showcases the level of risk people are willing to accept for a substantial award and opportunity to return to the status quo. Each of the people recruited into the game is deeply in debt and desperate; before the game started, this debt led them to situations they would not have otherwise found themselves in, including taking loans from loan sharks or living in poverty.
Dr. Praveen Kambam, a forensic, child, and adolescent psychologist, says Squid Game “shows just how far these people are willing to go ... They would rather endure this level of violence, or chance of violence, than deal with the system outside of the game.”12 While we may watch it and think, I’d never be in that situation to begin with. I don’t take risks like that, sometimes we overestimate our moral reactions in a given case. Think back to the Australians who lost their homes to flooding: they didn’t choose it, but were still faced with a harsh reality and higher risk-seeking behavior.
Case Study #2: Border Crossing
In June of 2021, the number of people trying to cross into the United States via its Southern borders reached a 21-year high.13 Of the 188,829 migrants attempting to cross the border, 105,000 were sent back to Mexico, where they faced persecution, deprivation, or even death.13 A few months later, in October of 2021, the country as a whole saw the highest number of irregular border crossings (1.7 million in the last 12 months) since at least 1960, when the government first began tracking it.14 What would drive these people to risk their lives to cross the border? Summer hurricanes have severely impacted homes and livelihoods in countries like Guatemala and Honduras, and gang violence has flourished in Latin America over the last few years.14 When one’s home, livelihood, and sense of safety are being hijacked, people feel more open to risky behavior. Migration represents all three scenarios in which risk-seeking becomes a motivational necessity.
Beyond Irrational Politics: As we’ve covered on this page, risk-seeking behavior takes many forms, including publicly lying or making up truths. Worrisomely, as the article puts it, “candidates (especially populists) who lie openly have managed to draw huge support,” capitalizing upon increased political polarization. Can science “depoliticize” the political sphere and bring back rationality?
COVID-19 and the Science of Risk Perception: Part of what drives risky behavior is having a low perception of risk when there is, in fact, a high risk. What has shaped people’s perceived risk of the virus, and how can we communicate how high it really is? Read the article to find out.
Need Not Greed: Bonuses, Risk-Taking and Evolution: A real-world example of when risk becomes a motivational necessity is the bonus structure of banks. This structure has inadvertently led to several financial crises in the last few decades. The article explores these concepts and presents the crises in the context of evolutionary psychology.
- Kahneman, D., & Tversky, A. (1979). Prospect Theory: An Analysis of Decision under Risk. Econometrica, 47(2), 263–291.
- Sitkin, S. B., & Pablo, A. L. (1992). Reconceptualizing the Determinants of Risk Behavior. Academy of Management Review, 17(1), 9–38. https://doi.org/10.5465/amr.1992.4279564
- Scholer, A. A., Zou, X., Fujita, K., Stroessner, S. J., & Higgins, E. T. (2010). When Risk Seeking Becomes a Motivational Necessity. Journal of Personality and Social Psychology, 99(2), 215–231.
- Page, L., Savage, D. A., & Torgler, B. (2014). Variation in risk seeking behaviour following large losses: A natural experiment. European Economic Review, 71, 121–131. https://doi.org/10.1016/j.euroecorev.2014.04.009
- Byrne, K. A., Six, S. G., Anaraky, R. G., Harris, M. W., & Winterlind, E. L. (2021). Risk-taking unmasked: Using risky choice and temporal discounting to explain COVID-19 preventative behaviors. PLOS ONE, 16(5), e0251073. https://doi.org/10.1371/journal.pone.0251073
- Chan, H. F., Skali, A., Savage, D. A., Stadelmann, D., & Torgler, B. (2020). Risk attitudes and human mobility during the COVID-19 pandemic. Scientific Reports, 10(1), 19931. https://doi.org/10.1038/s41598-020-76763-2
- Park, A. (2011, October 5). The Pancreatic Cancer That Killed Steve Jobs. Time. https://healthland.time.com/2011/10/05/the-pancreatic-cancer-that-killed-steve-jobs/
- Lauriola, M., & Weller, J. (2018). Personality and risk: Beyond daredevils-Risk taking from a temperament perspective. In M. Raue, E. Lermer, & B. Streicher (Eds.), Psychological aspects of risk and risk analysis (pp. 3–36). Springer.
- Anic, G. (2007). The Association Between Risk Taking And Personality [University of South Florida]. https://digitalcommons.usf.edu/etd/605/
- Pergamit, M., Huang, L., & Lane, J. (2001). Long-Term Impact of Adolescent Risky Behaviors and Family Environment. Department of Health and Human Services. https://aspe.hhs.gov/reports/long-term-impact-adolescent-risky-behaviors-family-environment
- Institute of Medicine and National Research Council. (2011). The Influence of Environment. In The Science of Adolescent Risk-Taking: Workshop Report. National Academies Press (US). https://www.ncbi.nlm.nih.gov/books/NBK53409/
- Smail, G. (2021, October 13). The Psychological Reason You’re Obsessed With “Squid Game.” Bustle. https://www.bustle.com/entertainment/why-squid-game-is-so-popular-psychology-interview
- Ainsley, J. (2021, July 16). Attempted crossings at southern U.S. border hit 21-year high in June. NBC News. https://www.nbcnews.com/politics/immigration/number-attempted-crossings-southern-u-s-border-hits-21-year-n1274230
- Sullivan, E., & Jordan, M. (2021, October 22). Illegal Border Crossings, Driven by Pandemic and Natural Disasters, Soar to Record High. The New York Times. https://www.nytimes.com/2021/10/22/us/politics/border-crossings-immigration-record-high.html