Evolutionary roots of risk aversion and risk-taking behaviors determined by the context described by Daniel Kahneman in his Prospect Theory.
I lived in South Africa for many years and traveled extensively in sub-Saharan Africa. During these years, I had the chance to observe many wild creatures in their natural habitat for long periods of time. Being a physician who is particularly interested in behavioral sciences, what attracted me the most were the behavioral patterns and decision-making mechanisms of "predators" and other large animals.
Imagine this: you come closer in car with open sides to less than ten meters away from a pride of lions resting in the shade. They look at you and continue to nap. Occasionally, one or two of them squint at you, but that's it.
I haven't tried it (that's why I can write this) but I've heard the stories: if you make loud noises or gesticulate dramatically while that close, it's not good. Woe betide you if you step away from the car at any time.
I also have a lot of observations about cheetahs, which I am very attached to. Unlike lions, cheetahs, who are smaller and usually roam and hunt alone, try to stay away from larger creatures or abandon their prey in the face of hyena packs. Because for a cheetah, even if it wins, in the wild being wounded means almost death. But if we cornered a cheetah, I'm sure it wouldn't take seconds for it to attack. The same goes for a mother cheetah trying to defend her babies.
When hippopotamuses, one of the creatures that cause the most human deaths in Africa, come out of the water for short periods of time, their skin begins to dry out rapidly, which causes them pain. If you get between the hippopotamus and the water while they are in this pain, you risk being divided into two. In the presence of pain, the risk of not being able to return to the water makes the hippo's eyes blind to any risk. Similar behavior is seen if you get between a wild buffalo and its herd. Given perceived danger, these creatures will not avoid taking risks.
The behaviors of these animals and of us developed as evolutionary patterns to help us to survive and reproduce.
Until the 1950s, instead of embracing this inheritance of evolution, we humans were lulled by the likes of John Stuart Mills. We thought that our behavior and decisions were based on rational calculations and reasoning, whereas we had to turn to other theories to understand how, for example, the Nazis or Il Duce, who came to power through elections, became popular.
Daniel Kahneman, a Jew who spent his childhood in Nazi-occupied Paris, was startled with the SS officer’s unexpected behavior as he met him on the street one night after curfew. The office likened him to the son he had left behind in Germany and hugged him. The idea that human behavior can be way different than we expect led him to study cognitive psychology.
Dabbling in cognitive psychology, Kahneman became interested in how people make decisions in uncertain situations in real life, not just in controlled laboratory settings. The development of Kahneman's decision-making model gained direction and momentum after a chance meeting with Amos Tversky in the late 1960s. Together, Tversky and Kahneman began to investigate how people make decisions, especially in complex situations involving risk and uncertainty. Their early work focused on the idea that people rely on mental shortcuts or heuristics to make decisions.
In 1979, they published "Prospect Theory: An Analysis of Decision Making Under Risk". This article was the seed of an area called behavioral economics. Their Prospect Theory challenged the then-common view that people make rational decisions for maximum utility. This theory, which won Kahneman the Nobel Prize in Economics in 2002, examined how people make decisions under risk and uncertainty, emphasizing two distinct behaviors: risk aversion and risk seeking. According to Daniel Kahneman, people tend to be risk-averse when dealing with potential gains and risk-seeking when faced with potential losses. Prospect Theory suggests that people value gains and losses differently, and that the pain of losing is felt more intensely than the joy of winning. This asymmetry leads individuals to make different decisions than expected, highlighting the complex nature of human psychology in economic behavior and contradicting expected utility theory, which assumes that people make decisions solely to maximize utility.
From an evolutionary point of view, these behaviors can be seen as adaptations to conditions like the animals I mentioned. While the animal shows risk-averse behavior by giving up possible gain in an uncertain situation, it can seek the risk in case of possible loss. We can relate this to the example I gave at the beginning, where cheetahs may give up their prey at the risk of injury, but will not avoid taking risks when their babies are at risk.
If we see a yellow blob approaching us fast from a distance in the middle of the wilderness, we don't spend time analyzing the risk. We try to avoid the potential risk by running or hiding. In contrast, in a harsh and unpredictable environment, in the face of scarce resources, we may embark on adventures full of uncertain risks. Both contrasting behaviors, in their respective contexts, are clearly aimed at ensuring both our survival and the continuation of our genes in the next generation.
These behaviors are not just relics of our past; they continue to influence human behavior today. Professional life is full of examples where we should choose between risk aversion in the face of uncertainty and complexity, and the potentially more lucrative but uncertain venture (risk-seeking). Similarly, in our personal lives, whether in our careers or relationships, or even in our daily activities, we constantly weigh the safety of familiar choices against the allure of what could be.
Understanding the evolutionary origins of our decision-making processes not only provides insight into why we behave the way we do, but also helps us make better choices. By recognizing the biases inherent in our risk assessment, we can strive to make decisions that are more aligned with our long-term goals and well-being.
While Kahneman's prospect theory is not limited to this, his work on risk behavior demonstrates the complexity of the human decision-making process. Our choices are guided by deep-rooted psychological mechanisms that have been shaped by evolution. For better or worse, we carry the legacy of their adaptive strategies with us as we navigate today's increasingly complex and accelerating uncertainties.
References
Kahneman, D., & Tversky, A. (1979). Prospect Theory: An Analysis of Decision under Risk. Econometrica, 47(2), 263–291. https://doi.org/10.2307/1914185
Kahneman, Daniel, 1934-2024, author. (2011). Thinking, fast and slow. New York :Farrar, Straus and Giroux
Machluf, K. and Bjorklund, D.F. (2015). Understanding Risk-Taking Behavior: Insights from Evolutionary Psychology. In Emerging Trends in the Social and Behavioral Sciences (eds R.A. Scott and S.M. Kosslyn). https://doi.org/10.1002/9781118900772.etrds0375