How Surprise Changes Your Appetite for Risk

From LiveScience:

According to new research from psychologist Heath Demaree, of Case Western Reserve University in Cleveland, Ohio, people who’ve experienced surprising outcomes in various situations — whether those outcomes were good or bad — are less likely to take risks in the future. In other words, it’s not whether you win or lose, but whether the outcome is expected. People appear to decrease their risk-taking levels after experiencing any surprising outcome — even positive ones.

“Surprising events are known to cause animals to stop, freeze, orient to the surprising stimulus and update their schemas of how the world works,” Demaree said. “Our recent research suggests that surprising events also cause people to temporarily reduce risk-taking.”


Souparno Maji

I thnk when people experiences positive events in surprises,deir reluctance 2 take risk must decrease as positve outcomes cause dem to opt 4 dis events as dey vl expct more profits!!

Soup rising

Wotta beezer spearing olde anguish languish! Eh?!

Dinorah

Dear Lord, Michael George! Perhaps if you weren't a white male living in Arizona, you'd find better things to do with your life than getting your kicks from winning arguments. Get up and do some good!

Michael George

I agree with this and have experienced it on both levels. Interestingly though, I am also better at reacting when unexpected situations do occur. In other words, if I were assaulted-- as one example-- I would now react swiftly to disable my attacker, due to an unfortunate and very unexpected experience I had a couple of years ago.

Of course, although I am a lot faster on my feet in an aggressive, out-of-the-blue attack, I am far less likely to find myself in that situation now.

You see, I am a liberal white male and I live in Arizona. If I defeat a lesser opponent verbally, a physical attack may happen. Explaining to a Tea Partier that Thomas Jefferson was an atheist (at least by Christian standards) and that Thomas Paine supported the idea of estate taxes... Well, they often get so confused, I can't believe more of them haven't attacked me.

So now, I argue online where I can't be hurt.

But also, online, I can't experience the intense pleasure of frustrating a political opponent to the point that he or she strikes me.

So yes. Both ways.

Read more...

Sid

So say, because of bad planning, the results become surprising and the risk appetite decreases...this makes Good planning that much more important

Enter your name...

The obvious conclusion is that we control Wall Street's risk-taking culture by creating random little surprises for the traders. I'm personally thinking a pie in the face when they arrive at work, but then they'd start to expect that, so we'd need some more options.

Timmy D

The only problem with that idea is that Wall Street takes risks with other people's money, not its own. If being exposed to surprising outcomes increased one's empathy then your plan might work.

NotSurprised

This research finding does not really surprise me. I guess I won't be reducing my risk-taking anytime soon.