Risks and Rewards Theory

Risks and Rewards Theory suggests that individuals make decisions based on weighing the potential benefits against the possible dangers. People are more likely to take a chance if they believe the rewards are significant and the risks are manageable. Conversely, they tend to avoid options where the risks outweigh the potential gains. This balance influences choices in various areas, from financial investments to personal relationships, highlighting how perceived opportunities and threats shape human behavior. The theory emphasizes that decision-making involves assessing both the positive outcomes and the possible negative consequences.