Risk-seeking

In accounting, finance, and economics, a risk-seeker or risk-lover is a person who has a preference for risk.

While most investors are considered risk averse, one could view casino-goers as risk-seeking.

[1] The standard way to model how people choose under uncertain condition, is by using expected utility.

A prospect, in this context, is a list of expected payoffs and their probabilities of occurring.

[1] Subsequently, it can be understood that the utility function curves in this way depending on the individual's personal preference towards risk.

The below graph shows how greater payoffs result in larger utility values at an increasing rate.

The below graph again display's an individual's utility function, however this time lower payoffs have a larger utility with respect to the original payoff (or "wealth") value.

Showing that this person is "risk-averse".It is important to note that for prospect theory value functions, risk-seeking behaviour can be observed in the negative domain

In a study done by Friedman et al. (1995), they found significant evidence to support that low childhood conscientiousness contributed heavily to adulthood mortality.

Ultimately, their findings solidified that low levels of childhood conscientiousness predict risk seeking, and risk-seeking increases the chance of accidental death.

Though risk-seeking deteriorates with age, risky exposure to abusive substances in adolescence can lead to lifetime risk factors due to addiction.

[2] Conscientious individuals are subject to greater internal impulse control which lets them think out risky decisions more carefully, while those low on conscientiousness are more likely to endanger themselves and others by risky, or sometimes even criminal behaviour.

[2] The psychometric paradigm explores what stable personality traits and risk behaviours have in common with an individualistic approach.

[3] Zuckerman's (1994) sensation seeking theory is important in assessing the causative factors of certain risk-seeking behaviours.

Many risk-seeking behaviours justify humans need for sensation seeking.

[3] Behaviours like adventurous sports, drug use, promiscuous sex, entrepreneurship, gambling, and dangerous driving to name a few both represent sensation seeking, as well as risk seeking.

[3] Impulsivity has also been linked to sensation seeking and in recent theories have been combined to form a higher order trait called impulsive sensation seeking.

This view looks less at impulsivity, puts more emphasis on cognitive dynamics and assumes people take risks because they have assessed the future outcomes.

Through an analysis done by scientists, they demonstrated that men typically seek risks more than women.

[4] There are biological differences in men and women that may lead to the drive to seek risks.

For example, testosterone plays a large role in risk-seeking in people and women have significantly lower levels of this hormone.

This hormone has behavioural effects on aggression, mood and sexual function, all of which can lead to risk-seeking decision making.

In their study, they also found that testosterone in excess leads to increased sexual enjoyment, and therefore more of an incentive to engage in risky unprotected sex.