You know it’s bad, but this is exactly what you want. To feel the thrill associated with the risk of something bad happening in the near future. Somehow, this is still a good price for how good the outcome might be. And this is what we plan to discuss today. Why is it so easy for us to take on so many risks, or why this risk-taking behaviour makes us feel good?
Why Do We Find Risk Taking To Be This Fun?
Risk-taking is a strange behaviour that we all like to play with. It doesn’t make any sense, but we still like to play with our own health, well-being, or even finances. It may give you chills, and the adrenaline only makes it better, but let’s have a look at the actual causes of why we are taking so many risks in our daily lives.
Thrilling Is Better Than Boring
Let’s take a simple example of a basic sports betting scenario where a casual punter takes £10 out of his pocket, and instead of buying himself something to eat or a product that makes him happy, he goes and places a bet on a football team that plays later that day .What drives betting decision to risk losing the money?
Firstly, it makes the whole experience much more intense. Knowing that a simple game can bring him extra winnings only makes the match day more interesting and packed with expectations and helps this punter feel alive with each important attack against the opponent’s defence.
With each risk taking action, the person goes through a complete emotional carousel that starts with a big thrill, followed by victory, triumph or relief. Another example that is also very basic is driving superfast even though you are perfectly aware that it is against the law, and it may cause you death. Apparently, the adrenaline rush and the positive emotions you feel immediately after are worth the price.
Social Contexts & Acceptance
Social acceptance is a common purpose for why people take risks. We do it from early childhood stages, and we keep on doing it for the same reason in our adulthood as well. Being accepted by our friends and close ones weighs a lot for our self comfort and self-respect.
If the conditions of gaining that approval from someone you appreciate involve some risk-taking, you will most probably do it without thinking twice. The same example from above can apply here as well. If your friends are passionate about cars and enjoy speed, you will find yourself in the position of adopting the same problematic behaviour only because you wish to fit in.
Mental Health Influence
For some individuals, risk-taking is just part of their daily lives. This behaviour is identified more frequently in persons who suffer from attention deficit and any other disorder associated with that affliction. They tend to get involved in risky situations because of their impulsive character traits. Also another example is bipolar disorder. During their hypomanic episodes, people who suffer from bipolar disorder can lose control and engage in high-risk situations.
The Sunk Cost Fallacy Effect
The sunk cost fallacy effect is something you do, believing it is the most logical action you can take, but in reality, it is wrong and wasteful. Basically, it is a logical error that any of us can get caught in. However, people who are involved in financial transactions or betting hobbies are more likely to get caught in a sunk-cost fallacy context.
The definition says that the sunk cost fallacy is a cognitive bias that causes individuals to continue investing in something despite negative results solely because of past investments. Basically, you refuse to admit that your bad investment is harmful to your future financial state, and you keep telling lies to yourself, hoping that, in the end, the investment will have a good return.
The idea of wasted resources is very hard to accept, especially when it comes to bad financial decisions. Justifying long-term bad financial decisions is not something we can do comfortably, so it is easier to remain irrational. Here are some other examples of such behaviour:
● Continuing to watch a movie you completely dislike because you have already paid for a ticket.
● You keep investing money in a business that will most likely continue to lose money.
● Staying in a toxic relationship because you have a common savings account.
Loss Aversion
Another consequence of risk-taking is loss aversion or the fact that losing something has a way bigger impact on your emotional state than winning something. Simply put, you are taking risks to avoid losing rather than secure winnings. People will always make decisions and prioritise actions that are more likely to help them avoid losses rather than increase their chances of winning.
We do this unconsciously because losing something has way more psychological consequences than winning something of equal value.
Example: According to Investopedia, investors are more likely to hold on to certain investments, securing their chances to avoid losses, than actually investing more, hoping for a greater and bigger outcome in profits.
To Conclude: Are There Any Benefits To Risk Taking?
To conclude this on a positive note, taking some small risks from time to time in a controlled environment will most likely be beneficial for you and your overall mental health. Non-harmful risks or small risks that can lead to losses that have no life-changing consequences can even help you with depression or spice up your current relationship. Some people gamble twice a month when they feel bored, and if you gamble responsibly, there is nothing wrong with that.
