From Risk-Seeking to Risk-Averse: The Development of Economic Risk Preference from Childhood to Adulthood

Abstract

Adolescence is often described as a period of heightened risk-taking. Adolescents are notorious for impulsivity, emotional volatility, and risky behaviors such as drinking and driving under the influence of alcohol. By contrast, we found that risk-taking declines linearly from childhood to adulthood when individuals make choices over monetary gambles. Further, with age we found increases in the sensitivity to economic risk, defined as the degree to which a preference for assured monetary gains over a risky payoff depends upon the variability in the risky payoff. These findings indicate that decisions about economic risk may follow a different developmental trajectory than other kinds of risk-taking, and that changes in sensitivity to risk may be a major factor in the development of mature risk aversion.

“I Know You Don't Know I Know…” Children Use Second‐Order False‐Belief Reasoning for Peer Coordination

“…These processing and inhibition demands may explain some of the failures. Furthermore, children at this age seem to be particularly willing to choose risky high‐payoff options over more probable low‐payoff ones (Harbaugh, Krause, & Vesterlund, ; Paulsen, Platt, Huettel, & Brannon, ). Such a temptation to gamble may have led some children to choose the box containing the highest reward instead of the box their partner was most likely to choose.…”

Testing a rational choice model of “desistance:” Decomposing changing expectations and changing utilities

“…During adolescence, individuals may be more tolerant of the risk associated with offending or may even engage in the behavior precisely because it is risky. Paulsen, Platt, Huettel, and Brannon (2012) demonstrated a linear decline in tolerance for risk from adolescence to adulthood. Tymula, Glimcher, Levy, and Rosenberg Belmaker (2012) also found evidence that adolescents are more tolerant of risk when compared with adults, and they argued that this tolerance is responsible for the high rate of risky behaviors during adolescence (see also Burnett, Bault, Coricelli, & Blakemore, 2010).…”

Conforming to coordinate: Children use majority information for peer coordination

“…It may be, however, that limited inhibitory control capacities could have masked coordination abilities in some children, resulting in fairly low conformity rates even when coordination was necessary. Moreover, previous studies have shown that children at this age seem to be particularly willing to choose risky high‐pay‐off options over more probable low‐pay‐off ones (Harbaugh, Krause, & Vesterlund, ; Paulsen, Platt, Huettel, & Brannon, ). Such a temptation to gamble may have led some children to choose the box containing the highest reward instead of the box their partner was more likely to have chosen.…”