In stressful situations, people make riskier decisions

When people are under stress, their decisions become riskier.

According to a recent study by researchers at the University of Arkansas, published in the journal Psychoneuroendocrinology, the main factor influencing this change in behavior is a decrease in “loss aversion.” Loss aversion is the human tendency to experience greater disappointment from loss than joy from gain. In other words, the pain of losing $100 is greater than the joy of winning $100.

The researchers also found that stress affects men and women differently. In general, stress has a greater impact on men’s decision-making. In stressful situations, women are better at predicting the outcome of a decision, while men are better at understanding the consequences of that outcome.

“In my life, if I’m stressed, I put off making decisions that could result in potential losses,” said Grant Shields, associate professor of psychological sciences and lead author of the study.

The “fight or flight” response is an ancient evolutionary survival mechanism that is activated when threatened. The brain instantly releases stress hormones, mobilizing the body to fight or flee. In the modern world, this mechanism is triggered by psychological pressure, causing people to make riskier decisions, perhaps as an attempt to “escape” from a stressful situation.

In this study, 147 participants were subjected to stress and then asked to make hypothetical financial decisions.

“Financial risk is easy to assess because people have a pretty good idea of what they would do with their own money,” Shields explained. “My research was aimed at understanding the components that make up this calculation.”

The participants’ decisions were analyzed using cumulative prospect theory, which assumes that decisions are determined by four factors: loss aversion, risk aversion, randomness — or stochasticity — of choice, and probability bias, which is the tendency to overestimate unlikely outcomes and underestimate likely outcomes. For example, probability distortion explains why people who buy lottery tickets focus on the small probability of winning rather than the greater probability of losing.

Cumulative prospect theory is widely used by behavioral economists, but fewer studies have examined the impact of stress on these decision-making factors.

In today’s world, making riskier decisions in stressful situations is probably not a good strategy. But Shields suggests that there may be an evolutionary explanation for this behavior.

“If you are an organism that is being hunted or persecuted by others, it makes sense to do things you wouldn’t do in a normal situation. Perhaps making a risky decision is better than staying put.”

People who spend time meditating every day acquire the skill of solving important life tasks much more effectively. The ostrich position, hiding one’s head in the sand, is usually taken by people who have difficulty coping with anxiety, anger, fear, and resentment. Meditation is a mental exercise that helps regulate these emotions and weakens their influence on decision-making. Even a short cycle of meditation therapy — 15 minutes a day for two weeks — produces noticeable results: greater awareness and a willingness to accept even the most negative information, in order to then summarize and comprehensively process the facts obtained. As a result, a person can see all the strengths and weaknesses of a situation, calculate the possible risks and benefits, and find the optimal solution.