By: Matthew Koh, Contribution Writer

September 25, 2006, The Daily Californian

New research suggests that people with lots to lose are often more willing to risk it all.

A study conducted by a pair of business professors from UC Berkeley and Northwestern University suggests that powerful people are more likely to take risks.

The findings, published in the July/August 2006 issue of the European Journal of Social Psychology, are the result of a series of five studies that began in 2002 performed by Cameron Anderson, an assistant professor at the Haas School of Business, and Adam Galinsky, an associate professor at Northwestern University's Kellogg School of Management.

Conventional wisdom suggests that low-power individuals should be more willing to take risks because they have less to lose, Anderson said.

The new study, however, lends support to what Anderson calls the approach/inhibition theory of power. Under this theory, high-power people are often exposed to more benefits and experience less interference from other people when taking risks to get those benefits. Because of this, they are more likely to take risks to get rewards.

On the other hand, low-power people are more exposed to threats and so are less likely to engage in behavior that could realize those threats.

In one experiment, participants' senses of power were evaluated through a questionnaire. In some cases, the participant's sense of power was manipulated by asking them to recall times when they felt powerful or powerless, or by asking them to complete word pairs that could only be filled with words associated with high or low power.

One study asked participants about their views on future personal risks, including job happiness and the chances of getting gum disease.

Another looked at the correlation between a sense of power and willingness to take risks, such as having unprotected sex.

In all five studies, the article says, there was a link between a heightened sense of power and an optimistic attitude about risk.

The behavior described by the study has been seen many times in the real world, Anderson said, citing the corporate scandals of recent years.

"The recent spat of corporate scandals are good examples of powerful people who were blinded to the risks inherent in their actions," Anderson said. "They took risks because they had an incredibly high sense of their own power."

Anderson also said he hopes the business world will take heed of the study.

"Ideally, the study would alert people in powerful positions to the cognitive biases they engage in when perceiving risks and making decisions," Anderson said. "I don't mean to imply with this research that powerful people shouldn't take risks, just that, when evaluating the pros and cons of a risky situation, they should be more balanced in their assessment."