Create account Log in

Why Do Some People Love Risk and Others Hate It?

Risk is like playing a game. Some people love the chance of winning a big prize, even if they might lose everything. Others would rather take a smaller but safer prize instead. This difference is called risk preference. It helps explain why some people invest in stocks while others save up for a rainy day.

Take the quiz →

Examples

  1. A child chooses to jump into a pool full of water, they love the chance of splashing around even though there might be some pain if they fall hard.
  2. A person decides not to buy a lottery ticket because they fear losing their $2, even though it’s just a small chance to win a million dollars.
  3. Some people invest all their money in one risky stock while others spread it out across many safe ones.

Ask a question

See also

Discussion

Recent activity

Categories: Economics · risk preference,behavioral economics,personality types,decision making