Taking Risks and the Psychology Behind It
Why do we take risks? Is it a matter of who we truly are or is it a direct result from our environment? One thing we know is that when we’re happy and content with ourselves, we tend to be a little less risk-averse. The odds are clearly stacked in our favor, or so we should think, and we tend to act on it.
Stock markets rise and fall on the news that a beloved football team has won or lost, for example. Our personal triumphs embolden us to seek even greater challenges. At the same time, environment does have a say in how we perceive risk.
The shorter the days become, the more we tend to shun activities dependent on unknown factors, estimates University of Toronto professor Lisa Kramer. But the psychology that goes in risk taking is much more diverse and worthier of a careful examination.
Sources:
https://www.fastcompany.com/3024600/how-seasonal-affective-disorder-twists-our-decisions
https://news.uchicago.edu/story/night-owls-unlike-early-birds-tend-be-unmarried-risk-takers
http://content.time.com/time/health/article/0,8599,1869106,00.html
https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0004362
https://www.outsideonline.com/2181706/why-do-we-love-extreme-sports
https://www.telegraph.co.uk/travel/travel-truths/the-wanderlust-gene-is-it-real-and-do-you-have-it/
https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0004362
https://cheme.stanford.edu/news/what-relationship-between-brain-and-risky-behavior
https://www.bloomberg.com/news/articles/2018-03-05/how-u-s-sports-betting-is-rampant-and-mostly-illegal-quicktake
https://www.institutionalinvestor.com/article/b1505pg5zw6mq9/playing-the-odds-in-sports-parallels-financial-markets
Up After Midnight? You Are a Chance Taker
Our sleep patterns can tell a lot about how naturally inclined we are to take risks. A study conducted by University of Chicago professor Dario Maestripieri has discovered a correlation between the tendency to stay up late and how likely we are to make a decision that entails risk.
Sports bettors who tend to play late or during the night are far more likely to place wagers that a more considerate individual would perceive as too bold for their taste. Some scientists chalk up night owls’ proclivity for risk to sleep deprivation.
Whatever the actual reason behind making a risky wager, though, scientists seem to agree that what our biological clock has something to do with the decision.
If You Love Taking Risks – You Will Keep Doing It
Once your brain has been hardwired to high-adrenaline activities, the body is simply unable to stop itself. Skydivers’ deaths used to be a rather common occurrence before the invention of the Cypres device, a piece of technology built into the diver’s parachute that automatically deploys the parachute under certain dangerous circumstances – such as when the diver is past a preset altitude or when the rate of decent is over a certain limit.
Before the Cypres device arrived, people who engaged in the activity would often test how far they can go before they actually deploy their parachutes. Following the introduction of the safety mechanism, sky divers today tend to perish because of colliding in mid-air and losing conscientiousness or simply experience a parachute failure, but no longer because they had failed to pull the cord.
The bottom line is still the same – people who love risk will pursue it.
Judging Sports Betting on a Hunch
One of the most common forms of risk-taking is wagering on the outcome of sports, and now that the activity is finally legalized, we’ll see the numbers of people who dabble in sports bets increase substantially.
It’s true that we take chances to make ourselves feel better. According to one study conducted by the Nottingham Trent University, the lower our expectation of turning a profit is, the more elevated our response to award is.
With these psychological stimuli available, the entire institution of sports betting can be equated to stock markets where traders utilize complicated quantitative tools and people work full-time to guess the outcome of the next financial or sporting event.
Naturally, risk taking here is based on solid numbers, but brokers and bettors are far more likely to venture on a hunch. According to Morningstar Vice President of Research John Rekenthaler, there are psychological factors and a lot of room for human judgement, which again brings us back to how likely we are to make risky decisions.
It Runs in the Family
A study conducted to analyze people’s disposition to acting in dangerous financial environments has found out that individuals carrying a gene by the name of DRD4 are far more likely to take risks.
It’s simple biology, it appears. DRD4 is linked to regulating the hormones in the pleasure center of the brain, which means that people who carry the gene are far likelier to engage in rather more challenging scenarios, even when they are backed with less statistically-relevant information to justify the risk.
Of course, DRD4 has other downsides, as it apparently could lead to addiction. One in four people carrying the gene engage in some activity to the point it’s unhealthy. It helps to know, though, that DRD4 can be outgrown regardless of the point of life it manifests strongly, but it’s easier in young age.
So Why Engage in High Risk Activities in the First Place?
Eric Brymer, a professor at Leeds Beckett, has spent his lifetime studying what makes people pursue extreme and often life-threatening activities. His comprehensive life-work has given us an “intimate insight” into the motivation of people who set out to conquer a mount or climb back on a wave.
His work has established multiple interesting reasons behind why people pursue these activities. According to Brymer, some say it’s because of the satisfaction people get at the end of the long grind. Others, who have spoken to Brymer, said that they re-define risk completely differently.
A good example can be given with a wet sinuous road in the country, for example. We tend to slow down at turns, because friction is reduced and visibility is poor, but we tend to lean on the gas pedal as soon as we see a bit of highway. In both cases, the chances of losing control of the vehicle are fairly even. What changes, though, is our perception of the risk.
What if people who engage in base jumping are not taking a risk, not in the sense less adventurous people understand at least?
A Wager or a Base Jump – It All Comes down to Choice
Ultimately, risk-taking is something we are inclined to do if the circumstances are right. Daylight and sound sleep could influence us to be a little bolder in general and experiment with high-yield investments – whether purely financial or otherwise.
Our personal happiness can affect how likely we are to place a challenging wager on the outcome of sporting events, and in other cases – how we construe the entire institution of risk taking.
