High reward promises can influence even rational and experienced individuals. The Risk Taker profile explains why confidence in logic and knowledge does not fully protect against deception. Grounded in Prospect Theory1, this profile shows that decisions are shaped by perceived gains and feared losses rather than objective probabilities. When potential rewards feel large or losses feel urgent, careful evaluation weakens, and risk-seeking behavior increases.
Understanding the Risk Taker Profile
The Risk Taker profile is shaped by the illusion that continued effort will eventually lead to success. After an initial loss, individuals experience cognitive dissonance similar to patterns observed in gambling disorder, where losses are rationalized as temporary in order to reduce the discomfort of losing. This rationalization creates the belief that the situation can be corrected by continuing or investing more. The thinking becomes, “Even if I lose now, I will probably win next time if I continue a little longer.” The belief that persistence will lead to recovery keeps individuals engaged even as losses increase, reinforced by the following mechanisms:
1. Chasing Small Probability Big Gains: In situations framed as potential gains, small chances of very large rewards are overweight. A low probability feels meaningful when the imagined outcome is life-changing. This makes high-return offers, ultra-high-risk investments, or similar schemes feel attractive, even when warning signs are present. The belief becomes “it is unlikely, but it could happen to me,” reducing caution.2
2. Risk Seeking After Losses: After losing money, the reference point shifts to being “below zero.” Prospect Theory predicts that people will become more willing to take risks to avoid accepting a loss.3 This explains why additional payments are often made to recover or complete an earlier investment. The focus shifts from minimizing harm to getting back to even4.
3. Mental Shortcuts That Amplify Risk: Several intuitive shortcuts intensify vulnerability.
- Selective bias, sometimes described as selective memory, leads individuals to recall success stories more easily than widespread failures, reducing awareness of how rarely positive outcomes actually occur.
- Availability bias reinforces this effect by making vivid or emotionally charged examples feel more common than they are.
- Optimism bias further contributes by encouraging individuals to underestimate their personal risk, while the illusion of control transforms chance outcomes into perceived skill.
- Together, these patterns promote continued risk-taking even as outcomes steadily worsen.
Reward Anticipation and Fear of Loss
Risk-taking in scams is driven by two fast emotional forces that override analytic thinking.5
1. Reward Anticipation: Imagining a high reward activates the brain’s reward system before evidence is checked. Attention narrows toward confirming details and away from inconsistencies. Prospect Theory explains why small chances of large gains feel “worth trying,” despite poor odds.
2. Fear of Loss: Fear of loss is stronger than hope of gain. Loss aversion makes potential losses feel urgent and overwhelming. When threats such as disappearing funds or missed profits appear, emotional arousal rises and reflective thinking declines. Acting quickly feels like the only way to reduce anxiety.
3. The Combined Script: Often, reward anticipation is introduced first to build attachment to a gain, followed by fear of loss to create urgency. Under this pressure, decisions shift from evaluation to emotional survival.
4. Identifying Early Warning Signs for the Risk Taker: Common signals include intense excitement about gains, discomfort with accepting losses, escalating risk to recover money, selective attention to success stories, and the belief that personal insight makes the situation different. Recognizing these signs helps interrupt the cycle before losses deepen.
Recommendations for the Public
Risk-taking is not a personal flaw, but without limits, it can escalate quickly. These practices help slow emotionally driven risk seeking before losses grow.
1. Recognizing Reward Framing: High reward offers often focus attention on gains while downplaying how unlikely they are.
Real Life Application: When seeing an investment, job offer, or online opportunity promising unusually high returns, pause and ask what happens in the most common outcome, not the best case. This helps shift attention away from imagined success.
2. Accepting Losses Early: Chasing losses increases vulnerability. Losses can trigger a strong urge to recover money quickly.
Real Life Application: After losing money in an online scheme or risky transaction, treat the loss as a signal to stop, not as proof that one more payment will fix the problem. Ending early prevents deeper financial harm.
3. Questioning Probability Claims: Small chances can feel larger than they are.
Real Life Application: Replace thoughts like “this could happen to me” with “how often does this actually work for most people?” Looking beyond success stories reduces distorted optimism.
4. Challenging Illusions of Control: Random outcomes are often misframed as skill-based.
Real Life Application: Ask whether the outcome truly depends on personal knowledge or timing, or whether it is driven by market forces, chance, or others’ actions that cannot be controlled.
5. Interrupting Escalation: Risk spirals grow through repeated commitment.
Real Life Application: Set a fixed financial limit in advance for online opportunities and do not exceed it, even if pressured to “top up,” “unlock,” or “recover” funds.
- Xiao Xiao, “Financial Literacy, Overconfidence and Investment Fraud Victimization,” Psychiatry Research 321 (March 2023): 115086, https://doi.org/10.1016/j.psychres.2023.115086. ↩︎
- Kahneman, Daniel, and Amos Tversky. Choices, Values, and Frames. New York: Cambridge University Press, 2000. ↩︎
- Bechara, Antoine. “Risky Business: Emotion, Decision-Making, and Addiction.” Journal of Gambling Studies 19, no. 1 (2003): 23–51. ↩︎
- Ce Lyu, Shenghan Gao, and Qingqi Zhang, “The Impact of Time Pressure and Type of Fraud on Susceptibility to Online Fraud,” Frontiers in Psychology 16 (April 2025): 1508363, https://doi.org/10.3389/fpsyg.2025.1508363. ↩︎
- Loewenstein, George, et al. “Risk as Feelings.” Psychological Bulletin 127, no. 2 (2001): 267–286. ↩︎
