Understanding an individual’s risk propensity may provide insight into decision-making processes involving risk, and predict behaviour under various policy interventions. There are different ways to measure risk propensity. One of the principal methods is through risk lottery elicitation tasks where validity issues maybe caused by participants’ irrational choices. Participants’ irrational choices are due to misunderstanding of the lotteries in these risk elicitation tasks which are presented as numerical probabilities. Such choices produce a high inconsistency rate as well as invalid predictions of individuals’ risk propensity.
This thesis aims to help people understand the lotteries of such risk lottery elicitation tasks and assist in their rational decision making with the use of interactive approaches. To achieve this, the thesis shows the results of three quantitative empirical studies based on the overarching research question: “Can incorporating visual elements and interactive approaches with graphs in a risk elicitation task influence rational decision making?”. The first study investigated whether by introducing gamified elements into a risk lottery elicitation task, participants would be influenced to choose rationally. The second study explored the underlying factors, which influence participants’ rational choices in options of a risk lottery elicitation task. The third study examined whether using interactive visual media would influence rational choices in a risk lottery elicitation task.
Results from the first experiment with 32 participants showed that, despite an acceptable level of the game’s usability, (as revealed from a validated usability satisfaction questionnaire, M = 6.86 of maximum 10 and SD= 0.62), there was no observable correlation between participant’ choices in the game and the standardised task, r(32) = .120, p < .511. Results from the second experiment with 60 participants, showed that participants who scored
higher in a validated numeracy scale were more likely to answer rationally in the lottery options of a risk elicitationtask,X2(1,N= 60) = 4.176, p = .041. Similarly, participants who scored higher in a validated cognitive reflection task had greater chance of choosing rationally in the Holt and Laury task, p < 0.05. Furthermore, when participants used graphs to reason their choices in the task, they were more likely to choose rationally in the task, p < .020. Results from the third experiment with 225 participants, yielded significant evidence that both people who scored lower in the validated numeracy assessment scale and higher, chose more consistently when they interacted with pie chartst hat presented the lotteries than when they were presented with lotteries as numerical probabilities or passive pie charts, p < .00.
The first experiment demonstrates high variance arising from inconsistency in the choices in both tasks. The results highlight the issues with irrational choices in risk lottery elicitation tasks and show that, despite evidenced usability the inconsistency of participants’ choices persisted in a gamified context similar to the standard Holt and Laury task. The second experiment results demonstrate that the use of visual methods, which may extend to game, is more likely to result in rational and therefore consistent choices for people with
numerical difficulties or impulsive thinking. The third experiment results demonstrate that the use of interactive visual media has potential to increase consistency of choices in risk lottery elicitation tasks especially for people with numerical difficulties.
These findings have implications for the future implementation of risk elicitation tasks that involve lotteries to convey risky situations particularly for audiences with score lower in validated numeracy and cognitive reflection tasks. The evidence provided by this thesis supports the assertion that by providing an interactive graphical presentational way of the lotteries in the task, the consistency of results can be increased. Interactive approaches with visual media were shown to assist on rational decision making for people who scored lower in the validated metrics of numeracy and impulsive thinking confirming empirical evidence which suggested the use of external representations to understand probability problems. Thus, these experiments’ results extended the theories supporting the use of external representations to solve probability problems by using specifically pie charts as external representations that assist the rational choice in the Holt and Laury task. This interactive approach, which could be extended through games, may reduce individuals’ irrational choices in risk lottery elicitation task and thus allow the accurate estimations of their risk propensity. The latter would help to provide more accurate predictions of individuals’ behaviour under various policies, in the context of financial investments.
|Date of Award||2017|
|Supervisor||Ian Dunwell (Supervisor)|