Some people take risks with investments while others on safety with their money and in other business activities. Researchers have looked at the attitudes towards risk in a group of 56 subjects and found that in people who preferred safety, certain regions of the brain show a higher level of activation when they are confronted with quite unforeseeable situations.  

First, the researchers tested a total of 56 subjects for their willingness to take risks. "In an economic game, the test subjects had a choice between a secured payout and a lottery," reports first author Sarah Rudorf from the Center for Economics and Neuroscience (CENs) at the University of Bonn.

People who showed a strong preference for the lottery in the test were categorized as risk takers. Others preferred the secured payout even if the lottery's odds of winning were clearly better. They were put in the risk-averse group. 

Next, the test subjects played a card game in a brain scanner to study their risk perception. Cards carrying numbers from one to ten were shown on the video glasses in front of their eyes. Each time, two cards were randomly drawn. Before the subjects were shown the cards, they were asked to place bets on whether the second card would have a higher or a lower number than the first one.

"The statistical probability for either case to occur is always the same: fifty-fifty," says Prof. Dr. Bernd Weber, co-author and also from Bonn. "This is important so that all subjects, whether they are risk takers or not, experience risky situations inside the scanner."

They were not able to assess their probability of winning their bet until they saw the first card. Here, the researchers found that in the subjects who tended to avoid risks, two specific regions of the brain were activated more strongly than in those who were willing to take risks. These areas are the ventral striatum and the insular cortex. The ventral striatum reacts both to the probability of winning, as well as to how well an individual can predict the outcome of the bet. The insular cortex is particularly sensitive to the risk a situation carries, and for whether it is higher or lower than anticipated. 

Risk seekers adjust their strategy after lucky streaks

Rudorf said, "Individuals in whom these regions of the brain are activated at a higher level seem to perceive risks more clearly and assess them as more negative than those who are willing to take risks."

Risk-averse individuals seem to overestimate the consequences of risk, and they did not distinguish as clearly between situations that turned out to be more or less risky than expected. In contrast, the test subjects who tended to take greater risks also focused their behavior more towards the wins and losses, and more clearly changed their strategy after negative situations. 

"This study is the first to show the neurobiological mechanisms of how individual risk preferences determine risk perception," says Weber. "This also has effects on behavior in the areas of finance and health."

In a next step, the researchers want to study the consequences these results have on economic decisions such as in the stock market. "This might even allow improving the advising process for investors with regard to their individual risk behavior," says Weber.