Basic and applied research on four topics

Among other things, the subject is risk perception (e.g. financial and health risks), its discrepancy with reality and associations with risk aversion. In addition, risk literacy is fundamentally explored through the use of a novel scale that includes computational skills, visual understanding, as well as illusions of risk and uncertainty. A survey of consumers in six European countries is also conducted. The results of this and all other studies from the project will be published in the research report on 30 June 2020.

Problems of risk can be distinguished from problems of uncertainty. This distinction follows the economist Frank Wright (1921), who described ambiguity in differentiation from risk. Economic and psychological research is based on this distinction.

Problems of risk are quantifiable problems for which a set of decision options can be defined. Not only all of the potential consequences of following the various decision options must be known, but also their probability of occurrence. Very clear examples are card games such as poker, but also slot machines and roulette. It is possible to calculate in advance which consequences will occur with which probability. Thus, optimal strategy can be calculated. Training in statistical understanding can lead to better decisions. Scientific communication of the evidence and numbers on the problem of risk can also lead to better decisions.

Problems of uncertainty, on the other hand, are limited quantifiable problems. Not all of the potential consequences of following the various decision options are known. Above all, not all of the respective probabilities of occurrence are known. This applies to problems of future developments and very complex problems. It is hardly possible to calculate in advance which consequences will occur with which probability. An optimal strategy can hardly be calculated, rather the fulfillment of an aspiration level (satisficing) is regarded as optimal. Training in statistical understanding can only lead to better decisions to a limited extent. Helpful effects of the scientific communication of the lack of evidence and uncertainty are limited. Strategies for reducing uncertainty must be communicated.

This part of the research programme aims at the basic principles of risk communication for the promotion of informed decision-making, e.g. for purchasing decisions. Recognised principles, such as representations using absolute risks and presentation formats with natural frequencies, are investigated and improved where possible. In addition to the known descriptive, numerical and visual formats, principles of data visualisation, interactivity and communication of uncertainty in the laboratory and on the Internet are also investigated. The research findings are incorporated into the development of tools and methods.

The decision environments of certain problems of uncertainty, e.g. whether product information found on the Internet are reliable for private investors in a specific individual case, can be scanned for informative hints.

This can be systematically supported with decision trees developed within the project, which resemble hierarchically arranged checklists. In this way, both the absence and the presence of informative hints become visible and thus the reliability of information can be verified. On this basis, problem-related uncertainty can be reduced.
The effectiveness of these decision trees is tested in different decision environments.

Application-oriented research focuses on the effects of risk visualisations and decision trees: How do information search, comprehension, risk perception, knowledge acquisition, decision-making processes and behaviour change for different representations of risks? All of these tools are evaluated.