A scarcity mindset refers to a psychological state triggered by the perception of insufficient resources, such as money or time. It can capture attention, consume cognitive resources, and impair the quality of decision-making. Yet, its influence on risk-taking decisions remains controversial. Some findings suggest that scarcity promotes risk aversion through heightened sensitivity to loss and limited cognitive capacity. Contrastingly, others show reversed effects. These findings demonstrate the necessity to examine potential moderators in the relationship between scarcity and risk decision-making and to further investigate the underlying mechanisms.

The present study combined behavioral paradigms and event-related potential (ERP) measures to investigate how scarcity mindset shapes risky choices and their temporal neurocognitive processes. A modified Stage Game paradigm was used to induce scarcity or abundance mindsets by manipulating participants’ initial endowments. Risk preference was measured using the Balloon Analogue Risk Task (BART), which requires participants to inflate a virtual balloon that can explode unpredictably and result in the loss of accumulated gains. The task allows continuous learning and adjustment of decisions based on feedback, capturing the dynamic and iterative nature of real-world risk-taking.

Experiment 1 employed a 2 (mindset: scarcity vs. abundance) × 2 (reward magnitude: low vs. high) mixed design. Scarcity was induced by a small endowment, creating a constant sense of resource insufficiency, while abundance was induced by a larger endowment. Risk preference was assessed using the average number of inflations for balloons that did not explode. Results showed a significant main effect of mindset. Participants inflated balloons fewer times under scarcity (M = 36.30, SD = 14.43) than under abundance (M = 39.95, SD = 15.15), F(1, 67) = 8.38, p <.01, η_p² =.11, indicating stronger risk aversion. Reward magnitude had no significant main effect, but the interaction between mindset and reward magnitude was significant, F (1, 67) = 5.34, p <.05, η_p² =.07. Simple effects analysis revealed that scarcity reduced risk-taking under high reward magnitude, F (1, 67) = 13.75, p<.001, η_p² =.17, but not under low reward magnitude, F (1, 67) =.17, p>.05. These findings suggest that scarcity increases loss aversion when potential rewards, and thus potential losses, are substantial.

Experiment 2 examined the neural dynamics of scarcity’s influence on risk evaluation using a 2 (mindset: scarcity vs. abundance) × 2 (feedback type: positive vs. negative) within-subject design. Behavioral results replicated Experiment 1, confirming that scarcity reduced risk-taking. ERP analyses focused on feedback-related negativity (FRN) and P300 components. FRN, measured 200-280ms after feedback at fronto-central electrodes, reflects early evaluation of outcomes and reward prediction errors. P300, measured 300-400ms after feedback at centro-parietal electrodes, reflects attention allocation and motivational significance of feedback. Scarcity produced significantly more positive FRN amplitudes than abundance, F (1, 25) = 6.20, p <.05, η_p² =.20, and significantly more positive P300 amplitudes, F (1, 25) = 6.28, p <.05, η_p² =.20. Both effects were moderated by feedback type. Under negative feedback, scarcity elicited more positive FRN and P300 amplitudes than abundance (FRN: F (1, 25) = 10.02, p <.01, η_p² =.29; P300: F (1, 25) = 7.98, p <.01,η_p² =.24). Under positive feedback, FRN and P300 did not differ significantly between mindsets. These results indicate that scarcity reduces the neural encoding of reward prediction errors while increasing attentional allocation to negative outcomes.

Together, these findings provide robust evidence that a scarcity mindset reduces risk-taking and alters the processing of negative feedback. The moderating effect of reward magnitude suggests that expected outcomes carry heightened significance under scarcity. More positive FRN amplitudes and P300 amplitudes point to a neurocognitive mechanism through which scarcity promotes cautious and loss-averse decisions. This research makes several contributions. It extends scarcity research to dynamic, ecologically valid tasks, addressing limitations of static, one-shot paradigms. It identifies reward magnitude as a key moderator that helps reconcile prior mixed findings. It integrates behavioral and neurophysiological evidence to reveal the temporal stages through which scarcity shapes risk evaluation. The findings enrich the scarcity theory by showing that scarcity reduces the capacity for adaptive reinforcement learning and fosters reliance on rigid, loss-avoidant decision strategies. These results provide theoretical insights and practical implications for interventions that support better decision-making among resource-constrained populations and help mitigate the long-term disadvantages associated with scarcity.