Risk-taking Behavior Research Articles

The impact of stress on the risk decision-making process.

The effect of stress on risk-taking or risk-averse behavior in decision-making has been inconclusive in previous research, with few studies revealing the underlying neural mechanisms. This study employed event-related potentials technique and combined a social cold pressor assessment test with a mental arithmetic task to induce stress responses, aiming to investigate the influence of exogenous stress on the risk decision-making process. Stress induction results indicated that, in addition to raising heart rate and blood pressure, stress responses were accompanied by enhanced negative emotions, diminished positive emotions, and alterations in neural activity. The outcomes of risk decision-making showed that stress did not significantly affect risk preference or time of choice but did reduce the feedback-related negativity/reward positivity, with a particularly significant effect observed for large outcomes. Stress also altered the amplitude of the P3 component, with stress decreasing the P3 value for winning outcomes relative to losing outcomes. The study suggests that understanding how stress affects risk preference should consider the emotional valence induced by stress. Contrary to the reward sensitivity hypothesis, stress weakened reward sensitivity. Stress led to changes in the allocation of cognitive resources for outcome evaluation: compared to negative outcomes, stress reduced cognitive resources for positive outcomes, which might be related to the enhanced negative emotions induced by stress. The study highlights the importance of focusing on the subjective emotional experience induced by stress in future research on stress and risk decision-making.

CSR in the banking industry: A longitudinal analysis of the impact on financial performance and risk-taking

Building on the stakeholder influence capacity theory we propose a non-linear relationship between CSR investments and financial performance and between CSR investments and risk-taking behavior in financial firms. We study the impact of ESG scores on both the financial performance and risk-propensity of European banks using panel data from 2005 to 2022. Given the role of Swiss banks as frontrunners regarding the implementation of CSR-related regulations in the financial industry, we also shed light on the Swiss case. Controlling for bank and time fixed effects we confirm a U-shaped relationship between ESG and financial performance, and an inverted U-shaped relationship between ESG and risk for Swiss banks. Remarkably, we find no relationship between CSR initiatives and financial performance for European banks and find a direct negative effect of CSR on risk density. These results indicate the need to consider institutional differences in the CSR debate. Moreover, we show that promoting ESG initiatives in the financial industry might lead to adverse effects (i.e. lower financial performance and higher risk) if banks do not commit sufficiently to those CSR investments.

Rank, stress, and risk: A conjecture

A perception at the core of studies that consider the link between social rank and stress (typically measured by the so-called stress hormone cortisol) is that the link is direct. Examples of such studies are Bartolomucci (2007), Beery and Kaufer (2015), and Koolhaas et al. (2017). A recent and stark representation of this body of work is a study by Smith-Osborne et al. (2023), who state that “social hierarchies directly influence stress status” (Smith-Osborne et al. p. 1537, italics added). In the present paper, we reflect on this “direct” perspective. We conjecture that the link between social rank and stress involves an intervening variable: an indirect relationship arises when the loss of rank triggers a behavioral response in the form of risk taking aimed at regaining rank, and it is the engagement in risk-taking behavior that is the cause of an elevated level of cortisol. Smith-Osborne et al., as well as others whose papers are cited by Smith-Osborne et al. and who, like Creel (2001) and Avitsur et al. (2006), conducted comprehensive research on the association between rank (social standing) and stress, do not refer to risk taking at all. We present four strands of research that lend support to our conjecture: evidence that in response to losing rank, individuals are stressed; evidence that in response to losing rank, individuals resort to risk-taking behavior aimed at regaining their lost rank; evidence that there exists a link between engagement in risky activities or exposure to risk and elevated levels of cortisol; and an analytical perspective on incidence and intensity, namely a perspective that shows how the willingness to take risks responds to a change in rank, specifically, how a loss of rank triggers a greater willingness to take risks and how this trigger is stronger for individuals whose rank is higher.

Does losing reduce the tendency to engage with rivals to reach mates? An experimental test

Abstract Male-male contests for access to females or breeding resources is critical in determining male reproductive success. Larger males and those with more effective weaponry are more likely to win fights. However, even after controlling for such predictors of fighting ability, studies have reported a winner-loser effect: previous winners are more likely to win subsequent contests, while losers often suffer repeated defeats. While the effect of winning-losing is well-documented for the outcome of future fights, its effect on other behaviors (e.g., mating) remains poorly investigated. Here, we test whether a winning versus losing experience influenced subsequent behaviors of male mosquitofish (Gambusia holbrooki) towards rivals and potential mates. We housed focal males with either a smaller or larger opponent for 24 hours to manipulate their fighting experience to become winners or losers, respectively. The focal males then underwent tests that required them to enter and swim through a narrow corridor to reach females, bypassing a cylinder that contained either a larger rival male (competitive scenario), a juvenile or was empty (non-competitive scenarios). The tests were repeated after one week. Winners were more likely to leave the start area and to reach the females, but only when a larger rival was presented, indicating higher levels of risk-taking behavior in aggressive interactions. This winner-loser effect persisted for at least one week. We suggest that male mosquitofish adjust their assessment of their own and/or their rival’s fighting ability following contests in ways whose detection by researchers depends on the social context.

Psychometric Evaluation of the Thai Male Depression Risk Scale (MDRS-TH)

Previous studies have reported that males frequently suffer from major depression. However, due to the norms of masculine roles, in which emphasis is placed in displaying strength, invulnerability, and control, the ways that some men exhibit depression may differ from traditional diagnostic symptoms of major depressive disorder. To this end, the Male Depression Risk Scale (MDRS) has been developed in order to better identify those men, who experience low moods and are at risk for suicide. This study evaluated the psychometric properties of the Thai version of the MDRS (MDRS-TH). A cross-sectional study was conducted with 600 participants, who were recruited through social media (male N=300). The average age was 38.74 years. About half of the participants were married (51.5%). The majority identified themselves as Buddhist (94.66%) and had completed postgraduate education (31.16%). The samples had a variety of occupations, including farmer, employee, student, retired, own business, etc. The data were analyzed using confirmatory factor analysis, Cronbach's alpha coefficient, and criterion-related validity using Pearson's correlation. The overall analysis (N=600) found that the MDRS-TH was consistent with the empirical data (CFI=0.918, TLI=0.905, SRMR=0.05, and RMSEA=0.05). The final model consisted of 5 components: 1) emotional suppression, 2) alcohol use, 3) anger & aggression, 4) somatic symptoms, and 5) risk-taking behaviors. The internal consistency of the MDRS-TH total score was 0.89, and the correlation criterion-related validity with the PHQ-9 was r=0.77. The results supported the fact that the MDRS-TH is a useful screening tool. Utilizing the MDRS-TH in primary care settings may assist to identify those men who are at risk for male-specific symptoms of depression so that early identification and intervention can be facilitated. In future studies, the generalizability of the scale would be strengthened if efforts to improve cross-cultural validation involving different cultural groups in Thailand were prioritized.

Comparing the healthy development of youth Australian Rules Footballers across talent development and community settings

ObjectivesThis study aimed to compare talent development athletes to community-level athletes in Australian Rules Football across various markers of healthy youth development.MethodsSurvey data were collected from 363 youth athletes (126...

It takes two to tango: Spousal risk preferences and CEO risk-taking behavior

Using hand-collected data on the cultural origins of S&P 500 CEOs and their spouses, we examine whether differences in risk attitudes within marriages influence corporate risk-taking behavior. We find that CEOs with more risk averse spouses adopt relatively safer corporate policies. The effect is stronger if the CEO comes from a more collectivist culture, has been married more recently, or shares more responsibilities with their spouse. Together, these findings suggest that the cultural composition of CEO household and spousal risk preference affect corporate risk-taking behavior.

30. Prenatal Adversity Promotes Sex-Specific Alterations in the Medial Prefrontal Cortex Transcriptomics, Executive Function, and Feeding Risk-Taking Behavior

30. Prenatal Adversity Promotes Sex-Specific Alterations in the Medial Prefrontal Cortex Transcriptomics, Executive Function, and Feeding Risk-Taking Behavior

Genomic Structural Equation Modeling Offers Insight Into Expressive Differences Between Childhood and Late-Diagnosed ADHD

Recent literature on attention-deficit hyperactivity disorder (ADHD) has identified differences in the genetic influence of age at first diagnosis. In particular, genome-wide association studies (GWAS) have found that childhood, persistent, and late-diagnosed categories of ADHD exhibit divergent comorbidity patterns. Based on these findings, we hypothesized that there would be significant differences in genetic risk sharing across childhood and late-diagnosed ADHD with other external traits. The traits selected for analysis included 3 dimensions of risk-taking behavior, Automobile Speeding Propensity, Drinks Per Week, and Number of Sexual Partners, and 4 dimensions of diet-related behavior, Protein Intake, Fat Intake, Carb Intake, and Sugar Intake. Results from Genomic SEM applied to investigate differences in genetic risk sharing with these external traits and the two ADHD subgroups revealed significant differences for number of sexual partners (p = 0.003) and automobile speeding propensity (p = 0.001). Practical implications of these findings are discussed and offer reason to reevaluate the current treatment of ADHD. For the full text, please visit https://scholar.colorado.edu/concern/undergraduate_honors_theses/ng451j94g.

Banking Sector Development and Bank Risk-Taking Behaviour: Evidence from Commercial and Non-commercial Banks in Tanzania

This study investigates the effect of banking sector development measured by domestic credit provided by banks to private sector as percentage of GDP on risk-taking behaviour of the banks in Tanzania, measured in terms of bank capitalization ratio. The relationship was observed using annual country-level and bank-level data from commercial and non-commercial banks operating in Tanzania from 2012 to 2021. A system GMM estimation technique was employed in the investigation. Our results found that the effects of banking sector development on bank risk measured in terms of bank capitalization ratio is homogeneous across commercial and non-commercial banks. This means the development in banking sector measured as credit to the private sector by banks percentage of GDP in Tanzania has significant positive effect on bank capitalization ratio. Hence, reduce bank risk of default. Nonetheless, the findings reveal further that the profitability of bank and bank size factors are significant positive and negative respectively in relation to bank capitalization ratio. The results are further robust to bank ownership status dummy variable (DOSF) and for country of originality of the banks (DCOF) used to investigate whether there will be significant change in the result or not. The results of the robustness test indicate that banking sector development has insignificant effects on capitalization ratio when banks categorized as domestic and foreign banks as well as when banks categorized as private and state-owned banks.

Life in the fast lane: the role of temporal processing in risk-taking behaviors

An existing theoretical framework proposes that aberrant temporal processing and a fast internal clock, denoted by overestimation and under-reproduction of time, increases the likelihood of engagement in risky behaviors (ERB). The primary aim of this project was to improve our understanding of the relationship between temporal processing and ERB in college students. The present study used the Wittmann and Paulus (2008) theoretical framework to examine the associations between temporal processing and ERB in college students. College student participants (N = 215) completed self-report measures of ERB, delay aversion, inhibitory control, ADHD symptoms and objective cognitive time estimation and time reproduction tasks. Time estimation accuracy was significantly associated with lower engagement in sexual risk behaviors (OR = .988; 95% CI: .979, .996; p = .006) and aggressive behaviors (OR = .989; 95% CI: .980, .998; p = .018). Time reproduction was not significantly associated with ERB. The present study established preliminary support for the associations between aberrant temporal processing, namely aberrant time estimation, and ERB among college students.

Threshold effect of bank governance on risk-taking behaviours of banks; the role of regulatory framework in Africa

Threshold effect of bank governance on risk-taking behaviours of banks; the role of regulatory framework in Africa

Sexual Risk-taking Behaviours amongst Rural Adolescent Boys in a Province in South Africa: A Qualitative Study

Background Risky sexual behaviours amongst adolescents contribute to public health problems globally and can be linked to cultural norms and lifestyles. This study aimed to explore the influences that are related to sexual risk behaviours amongst adolescent boys in a rural setting in South Africa. Methods The research was guided by Bandura’s social learning theory. The research used a qualitative approach with an exploratory phenomenological research design. Purposive sampling was used; 30 adolescent boys aged 13 to 18 years were recruited from 5 high schools in a province in South Africa. Focus groups were created, and data were analysed using thematic analysis (TA). Results Five themes emerged naturally out of the data, namely: 1) Lack of parental communication about sex; 2) Alcohol use; 3) Media influence; 4) Pregnancy and manhood; and 5) Government grants. Conclusion Findings revealed that the sample of male adolescents was involved in high-risk sex behaviours that were influenced by their sexual desires, consumption of alcohol, desire to prove their manhood, and receiving money from government grants. It was recommended that the Department of Education (DOE) in South Africa should implement and update sex education programmes at both primary and secondary schools.

A Machine Learning Approach for Investigating the Determinants of Stock Price Crash Risk: Exploiting Firm and CEO Characteristics

This study uses machine learning to investigate the effects of firm and CEO characteristics on stock price crash risk by collecting massive data on publicly listed firms in China. The results show that eXtreme Gradient Boosting (XGBoost) is the most effective model for predicting stock price crash risk, with relatively satisfactory performance. Meanwhile, the SHapley Additive exPlanations (SHAP) method is used to interpret the importance of features. The results show that the average weekly return of a firm over a year (RET) contributes the most and is negatively associated with crash risk, followed by Sigma, IPO age, and firm size. We also found that, among CEO characteristics, CEO pay contributes substantially to crash risk at the firm level. Our findings have important implications for research into the impact of firm and CEO characteristics on stock price crash risk and provide a novel way for investors to plan their investment decisions and risk-taking behavior rationally.

The investment behavior of China-connected mutual funds in the pandemic: Information advantage through operational link

Focusing on the origination of the COVID-19 outbreak in China, we examine the risk-taking behavior and performance of U.S. equity mutual funds indirectly exposed to China by holding U.S. firms with operational links to the country. We find that China-connected funds are associated with lower risk and higher abnormal returns at the outbreak of the pandemic. The information advantage underlying the outperformance of these funds is reflected in their trades being mimicked by that of other funds, and in the superior timing and stock picking ability of managers. These funds also maintain higher stock liquidity positions and better portfolio diversification during the pandemic. We further identify that fund managers' ethnic origin is the underlying channel for the outperformance of China-connected funds. Our results are robust across a wide range of tests.

Get advanced or retreat: well-informed board and bank risk-taking

Purpose This paper aims to examine the relationship between board structure and risk-taking, exploring how this association is influenced by advanced technologies in the banking sector. Design/methodology/approach This study uses a panel sample of 22 Pakistani banks from 2011 to 2018. To test the authors’ hypothesis, the authors use regression analysis with two-way cluster robust standard errors. Further, the authors also check the robustness of the authors’ findings using alternate proxies of board structure and bank risk-taking behavior. To address endogeneity concerns, the authors use the two-stage least square technique. Findings In the era of the Fourth Industrial Revolution, Pakistani banks’ digitalization is modeled by the presence of Temenos-T24/Oracle as their core banking system (software providing end-to-end operational integration). Its interactional effect with corporate governance is evaluated to implicate informed risk-taking by the board as a result of improved information access and analysis. The authors find that board size has a positive association with risk-taking, and the use of modern technology reshapes this association in the banking sector. Originality/value The contribution of this paper is twofold. First, the impact of board structure on bank risk-taking has not been extensively researched in Pakistan – a highly volatile and unpredictable economy. Second, the evaluation of the role of technology on bank risk is being researched for the very first time – a uniqueness of this paper.

The effect of environmental variation on the relationship between survival and risk-taking behaviour in a migratory songbird.

Temporal changes in environmental conditions may play a major role in the year-to-year variation in fitness consequences of behaviours. Identifying environmental drivers of such variation is crucial to understand the evolutionary trajectories of behaviours in natural contexts. However, our understanding of how environmental variation influences behaviours in the wild remains limited. Using data collected over 14 breeding seasons from a collared flycatcher (Ficedula albicollis) population, we examined the effect of environmental variation on the relationship between survival and risk-taking behaviour, a highly variable behavioural trait with great evolutionary and ecological significance. Specifically, using annual recapture probability as a proxy of survival, we evaluated the specific effect of predation pressure, food availability, and mean temperature on the relationship between annual recapture probability and risk-taking behaviour (measured as flight initiation distance [FID]). We found a negative trend, as the relationship between annual recapture probability and FID decreased over the study years and changed from positive to negative. Specifically, in the early years of the study, risk-avoiding individuals exhibited a higher annual recapture probability, whereas in the later years, risk-avoiders had a lower annual recapture probability. However, we did not find evidence that any of the considered environmental factors mediated the variation in the relationship between survival and risk-taking behaviour.

Adolescent rats engage the orbitofrontal-striatal pathway differently than adults during impulsive actions

Adolescence is characterized by increased impulsive and risk-taking behaviors. To better understand the neural networks that subserves impulsivity in adolescents, we used a reward-guided behavioral model that quantifies age differences in impulsive actions in adult and adolescent rats of both sexes. Using chemogenetics, we identified orbitofrontal cortex (OFC) projections to the dorsomedial striatum (DMS) as a critical pathway for age-related execution of impulsive actions. Simultaneous recording of single units and local field potentials in the OFC and DMS during task performance revealed an overall muted response in adolescents during impulsive actions as well as age-specific differences in theta power and OFC–DMS functional connectivity. Collectively, these data reveal that the OFC–DMS pathway is critical for age-differences in reward-guided impulsive actions and provide a network mechanism to enhance our understanding of how adolescent and adult brains coordinate behavioral inhibition.

Financial literacy and risk-taking behavior: a study of graduates and undergraduates

PurposeThis study examines the relationship between financial literacy and risk-taking behavior in the stock market for both graduates and undergraduates.Design/methodology/approachThis study conducted two surveys on two groups: graduates and undergraduates. The questionnaires were sent to the two groups via “Google Form”. The surveys were undertaken from March to October 2021, with final data on 500 undergraduates and 400 graduates. The three techniques used are multiple linear regression (MLR), structural equation model (SEM) and ordinal logit regression (OLR) to examine the causal relationships.FindingsBased on survey data on 400 graduate and 500 undergraduate students, our results show that financial literacy is positively associated with risk-taking behavior (i.e. use of debt and willingness to use debt) after controlling for demographics. Graduates with higher levels of financial literacy are more likely to use debt. Undergraduates with higher levels of financial literacy are more willing to use debt. In addition, parental education has a significant moderating effect on the association between financial literacy and debt use among undergraduate students. The results are robust compared to the alternatives.Research limitations/implicationsAlthough this study finds a positive association between financial literacy and risk-taking behavior among graduates and undergraduates, and these results are robust to the alternatives, the scope of this study is limited and only focuses on Vietnam. Hence, it needs to be expanded overseas. Next, graduates may make investment decisions based on stock prices or valuations, and as a result, the link between financial literacy and stock valuations should be investigated in subsequent research. Last but not least, further studies should also examine the digital financial literacy level of the younger generation, as it plays an important role in the digital age.Practical implicationsFirst, this study finds that higher financial literacy tends to use more debt, implying that financially literate people know how to use debt smartly to earn more profits. Second, students with higher-educated parents are less likely to use debt for stock investment, meaning that parents help students avoid possible risks while in the university. Finally, female graduates and college students all perform lower in financial literacy than their male counterparts. This can create a larger gender gap in financial literacy between women and men, particularly, in a society in which men often play the leading role in the family. As a result, it calls for policymakers, educators and parents to pay more attention to improving financial literacy among girls and women in general.Originality/valueThis study has three contributions. First, this is the first study to examine the impact of financial literacy on risk-taking behavior between two groups of graduates and undergraduates. The results show that individuals with a higher level of financial literacy are more likely to engage in risk-taking behavior (i.e. debt use) in terms of the stock market. Recent research, for example, Phung et al. (2022), examines investors’ informal debt (from families and friends), while this study investigates graduates’ debt use (from brokerage firms). Second, parental education is a significant mediator between college students’ financial literacy and debt use. The literature on parental socialization mainly documents parents’ direct influence on children’s financial knowledge and performance (Shim et al., 2010; Phung, 2023). Unlike previous research, this study finds that parental education plays a moderating role between college students’ financial literacy and their risk-taking behavior. Finally, three methods and multiple models are used to test causal relationships. The results are robust compared to the alternatives.

Readability and banks’ risk-taking behavior: Evidence from GCC

We investigate the relationship between annual reports’ text readability and bank risk-taking in the Gulf Cooperation Council (GCC) countries. We find that easy-to-read annual reports are associated with a higher probability of banks’ insolvency. This finding suggests that banks with higher risks have a greater incentive to reduce information asymmetry, resulting in easy-to-read annual reports to gain the trust of the banks’ investors. The result is also attributable to the fact that GCC banks have a tight culture and formal procedures that bank managers rely upon to manage uncomfortable circumstances like risk-taking behavior. Our study findings also suggest that the traditional dynamics of market discipline theory do not effectively operate within the GCC banking environment. This might be attributed to the inadequate governance frameworks established for these financial institutions.