A Dynamic Account of Rational Decision Making under Uncertainty: The Case of Risk Assessment in Hazardous Technological Systems

Abstract

Over the past two decades, scientific views of a strong sociocultural variability of risk perception and risk acceptance have gained prominence in the social sciences, including technology assessment. However, many of the sociocultural theories of technological risk bearing ignore the experimental fact that the observed variability of risk attitudes is, to some considerable extent, not socioculturally contingent, but fits into a frequent and recurrent pattern known as the Allais paradox. This chapter outlines a recently developed approach to decision making under uncertainty which combines principles of non-linear utility theory with those of stochastic dynamic processes. The approach proves instructive when employed in the analysis of the observed variation in technological risk acceptance. The analysis includes applications to basic problems of risk assessment such as voluntary and involuntary risk bearing, aversion to risks with very low probabilities, but large potentials for damage, and observed social attitudes toward hazardous technologies.