In most real-life situations, some risk is present, although it typically cannot be neatly and mathematically calculated as it can in gambling halls. The extent of the risk is estimated in the judgment of the acting person. Nevertheless, the law of diminishing marginal utility implies that the element of risk is in itself a negative element, that is, a source of disutility. Furthermore, the greater the degree of risk (even if that risk is just as much "upside" as "downside"), the greater the resulting disutility.

Why then do people take risks at all? In particular situations, people judge that the probability and/or degree of success not only exceeds the probability and/or degree of failure, but exceeds it to such an extent as to outweigh the disutility of the risk. (Of course, either success or failure may provide one possible benefit, namely, the garnering of new information from experimentation.)