Abstract:

Psychological insecurity refers to the anxiety about potential harm and threat. Many individuals make decisions when they are psychologically insecure. Existing literature has revealed inconsistent results regarding the effects of psychological insecurity on risk preference, and the mechanism of such effects remains unclear. The current study proposed compensation mechanism as a mediator and option distribution as a moderator in order to investigate why and how psychological insecurity would influence risk preference. The findings would help to clarify the patterns of decision-makers’ risk preference under psychological insecurity, improve the theories of decisions under risk, and offer scientific evidence for practical implications in public administration.

Key words: psychological insecurity, risk preference, compensation, option distribution