How does stress affect individual risk seeking?

Research in the fields of financial investing, health, and organizational work has revealed that individuals are more likely to take risks when faced with stress. Prior studies have explained the underlying processes between stress and risk-taking from the perspectives of value appraisal, risk perception, and decision strategy. However, these studies were more akin to explore how people react more than why people react in risk-seeking ways under stress. Therefore, in order to obtain a more comprehensive understanding of the association between stress and risk-seeking, this study aimed to reveal the direct and root reasons that explain an individual’s risk-taking behavior under stress and to clarify the internal mechanisms of this association. Several theories have suggested the reasons by which stress affects risk-seeking. For example, expected utility theory proposes that individuals tend to attach greater subjective value to the risk options in stressful situations. Prospect theory further suggests that stress affects both of the subjective value and subjective probability of risk options. These two theories consider cognitive changes as the possible reason that explains the “stress-risk-seeking” association. The dual-process theory further proposes that the said changes in the cognitive process are due to the depletion of cognitive resources under stress. Therefore, individuals tend to prefer labor-saving heuristic processing to adapt to the environment. The sensitive theory provides an explanation of the cognitive changes from an evolutionary perspective, suggesting that stress can unbalance individuals' psychological needs, crave higher rewards, and therefore, show more risk-seeking behaviors. The current study proposes that stress affects individuals’ value appraisal, risk perception and decision strategy through changes in cognitive resources and psychological needs. Specifically, on the one hand, stress occupies cognitive resources and weakens executive function, which is manifested in difficulties in suppressing dominant responses, slower task switching speed, and impaired working memory. On the other hand, stress unbalances individuals’ psychological needs and increases chances of reward-seeking, which is manifested in being more sensitive to high-reward options and positive reinforcement. Then, changes in executive function and psychological needs cause individuals to overestimate the positive outcomes of risky options and to reduce the perceived probability of negative outcomes and therefore, adopt heuristic strategies that consume less cognitive resources. Then, the heuristic strategies affect individuals’ risky behaviors through distorting their evaluations of risks, such as neglecting the possibility of negative outcomes and merely pursuing high-return options. In addition, our model accounts for boundary conditions in which the effects of stress on reward-seeking may differ by gender, materialism, and levels of stress coping; and the effects of stress on executive control may be moderated by factors such as age, stressors, social support, and domain specificity. Finally, we encourage future research to explore the association between stress and risk-seeking from three aspects. First, how would the dynamic changes of executive function under stress affect risk-seeking; Second, how does the interaction between cognition and emotion under stress affect risk-seeking; and Third, carry out intervention to regulate stress and reduce risk-taking behaviors.