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I still remember walking through music stores as a teenager and gravitating toward albums with the black-and-white “Parental Advisory: Explicit Lyrics” sticker on the cover.

The label was supposed to warn parents about the music available to young ears. But instead of deterring sales, it made the albums more alluring.

Lately, I’ve been thinking about that phenomenon while watching the lines between investing and gambling continue to blur. Investing, speculating, and gambling are synonyms to many young men.

Betting is now deeply embedded in professional sports. Prediction markets – the fancy term for betting on sports – have made their way north of the border. Crypto feels more like a movement, than an investment. And this all makes even an all-stock portfolio look conservative by comparison.

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Given all that, this new paper in the Journal of Behavioral Decision Making immediately piqued my interest. Its central finding is simple: Warnings can sometimes backfire.

The paper found that warnings can increase attention to the very behaviour they are trying to discourage. This was especially true when the activity felt rewarding and the harmful outcomes were rare.

Over time, people start learning from their own limited experience and the warnings become background noise that barely registers in our minds.

The paper is not about investing or gambling directly, but the behavioural mechanism it discussesfeels highly relevant to the financial world investors find themselves in today. We’re trying to find a balance between allowing access to products that may be riskier or more complex (or both), in an environment where more investors are eschewing working with professional adviser.

Are we relying too much on risk disclosure to do the heavy lifting considering these two trends? That’s why this paper is relevant.

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The logic is straightforward. Warnings start to feel exaggerated over time – especially in environments where people get rapid feedback.

Sports betting apps are built around constant engagement and repeated participation. Prediction market hot streaks can convince someone they have skill where they aresimply experiencing randomness. Crypto proponents often see warnings as simply a product of non-belief.

But the growing wave of private assets being marketed to retail investors is perhaps the most direct application of the paper’s findings. The returns of these funds can appear smooth even when risk is high because of the way these funds are valued. They don’t gyrate second-to-second, or even day-to-day, like stocks or traditional investment funds.

The absence of visible volatility can easily be mistaken for the absence of risk. There’s even a term critics use for this: volatility laundering.

But before a private-equity or private-credit fund blows up (if it blows up), quarter after quarter of stable returns would have made the risk warnings come across like Chicken Little.

If we keep hearing the sky is falling, and it doesn’t, we start to discount that risk. Even if sometimes the sky does fall in investing.

This doesn’t mean warnings are pointless. But they may need to be rethought. Because when I brought the CD marked with a parental advisory warning up to the till, the sales associate couldn’t care less about asking if my parents had given me permission to buy the album in spite of the warning.

And if DIY investors try to execute a risky trade or purchase some new type of fund that promises to give retail investors access to “what used to be reserved for sophisticated high-net-worth or institutional investors before” and a generic warning pops up, is anyone going to check if those investors truly understand that risk?

Or will those warnings simply function like the parental advisory labels did for my generation: not as deterrents, but as signals of where the excitement is?

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Preet Banerjee is the creator of YourMoneyDegree.com, a financial literacy program with an AI companion app.