May 13, 2016

New Research Suggests Being in the Presence of Others May Stimulate Risk-Taking

Individuals are more likely to engage in risk-taking behavior if they are in the mere physical presence of other human beings, according to new research published in the Journal of Behavioral Decision Making.

This research revealed that the physical presence of others in one’s immediate environment can stimulate risk-taking behaviors, even when people have no real contact or interactions with each other. This “mere-presence” effect is magnified when the individual is in the presence of those sharing his or her social group membership.

“We took a multi-method approach and systematically investigated whether, why and when the mere physical presence of others affects different risk-taking behaviors: acceptance of financial volatility, attitudes toward risky gambles and risk tolerance for gambles,” says Professor Eileen Chou one of the study’s authors. “Our results reflect participants’ reactions to the immediate physical environment in which their risky decisions or behavior occurred.”

Previous research has shown that mammals in group settings are more relaxed and less vigilant to predators. Professors Chou and Loran Nordgren of the Kellogg School of Management, hypothesized that humans would engage in behavior similar to that exhibited by other groups of social animals. Additional research on attachment theory and risk-taking in teams further supported their prediction.

Chou and Nordgren conducted five laboratory studies to investigate the relationship between the physical presence of others and risk-taking behavior. The first of these studies examined an individual’s gambling behavior when alone versus in a room with other study participants. Results established a significant causal effect between the presence of others and gambling – the presence of others increased an individual’s tolerance for riskier gambles. A second study revealed feelings of security as an underlying psychological mechanism of the mere-presence effect.

The authors then sought to examine a connection between the three variables in question – mere physical presence, feelings of security and risk-taking behavior – and their relationship to social groups. They did this by assigning study participants to one of four conditions: a triad with an ingroup member, someone of the same social group, and an outgroup member, someone of a different social group; a triad with two outgroup members; a triad that did not receive group manipulation; or the respondent performed the task alone. The authors conceptualized members of a triad without manipulation to be the mere presence baseline condition.

In the first task, Chou and Nordgren asked participants to rate their feelings of security. The authors found that participants in a triad that included members of their ingroup and participants with the mere presence baseline condition reported feeling more secure than other participants in the study. In the second task, the authors presented participants with a choice of a gamble for a monetary reward or a lower sure payment. Again, the authors found that participants in triads with other members of their social groups and participants with the mere-presence baseline condition made riskier bets than others. This finding confirmed their earlier findings connecting mere-presence to willingness to take financial risk.

In their final study, Chou and Nordgren divided participants into secure condition and control condition groups. The authors then manipulated the feelings of security among the participants and gave them the choice of a gamble or a sure payment. Results again revealed a clear connection between feelings of security and risky behavior.

Chou and Nordgren believe these results add to the existing body of research on individual and group behavior, group processes, and decision-making. The research has implications on the current understanding of risk perception and risk-taking. Specifically, their findings provide a broader understanding of the impact of social interactions on an individual’s risk aversion. Chou and Nordgren hope these findings will lead to future research that further examines how subtle environmental cues can have profound impact on human behavior.  

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