Who Takes Risks?

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Abstract
National leaders confront risky decisions on a regular basis. Although leaders may differ widely in their tolerance for risk, students of foreign policymaking lack compelling explanations for these differences. One of the few attempts to grapple with this problem holds that decision makers accept risks to avoid losses but refuse to take risks to make comparable gains. This tendency, embodied in prospect theory, is experimentally robust but consistently fails to predict the behavior of one third or more of the subjects. To investigate the contribution of individual differences to risk taking, the authors administered three questionnaires assessing risk propensity and two personality inventories (the Myers-Briggs Type Indicator and the Revised NEO Personality Inventory) to 126 subjects. The results identify strong personality predictors of generalized risk taking. Contrary to prospect theory, some people were especially willing to take risks to make gains, whereas others were particularly unlikely to take risks when facing potential losses. Statistical analyses lend support to a three-stage model of risk taking. The findings suggest that if students of international conflict want to understand risk taking, then they must consider not only how leaders frame conflicts but also the character of the leaders themselves.