The Psychology of Risk and its Role in Military Decision Making

Transcription

1 Defence Studies ISSN: (Print) (Online) Journal homepage: The Psychology of Risk and its Role in Military Decision Making Wing Commander R. J. Knighton RAF To cite this article: Wing Commander R. J. Knighton RAF (2004) The Psychology of Risk and its Role in Military Decision Making, Defence Studies, 4:3, , DOI: / To link to this article: Published online: 25 Nov Submit your article to this journal Article views: 809 View related articles Citing articles: 2 View citing articles Full Terms & Conditions of access and use can be found at

2 ARTICLE The Psychology of Risk and its Role in Military Decision-Making WING COMMANDER R. J. KNIGHTON, RAF Taylor FDEF sgm / Defence Original Autumn & and Studies Article Francis (print)/ Ltd Ltd (online) British Defence Doctrine teaches that decision-making is one of the military commander s primary responsibilities. 1 The military commander is charged with awesome responsibility. Not only does his profession carry with it the unlimited liability associated with the possibility of laying down his life for others, he must also make decisions that could result in others paying the ultimate price. For the military commander, improving decision-making skills is not just a matter of professionalism, it can be a matter of life and death. There is a great deal of academic research and literature on the psychology of risk and its role in decision-making in civilian environments. It is clear from this literature that psychological factors affect people s risk perception and preference, and that this can harm the quality of their decisions. It could be argued that military decision-makers will also be affected by these factors. If this hypothesis were correct, it would have significant implications for military commanders in all environments. This article seeks to examine this previously unexplored link and to determine the role the psychology of risk might play in military decision-making. The article develops a definition of risk and shows that the concept of risk is central to decision-making. The author will then examine decisionmaking theory to demonstrate how the psychology of risk affects decisionmaking. Although the British military has accepted the value of the commander s intuition in decision-making, its primary decision-making tool the estimate process is based on the rational model of decisionmaking. The analysis of decision-making theory begins, therefore, by considering the principles of the rational decision-making model and goes on to consider the research from behavioural scientists that shows that people consistently violate these principles. The study also considers the Wg Cdr R. J. Knighton, RAF, Advanced Command and Staff Course. Defence Studies, Vol. 4, No.3 (Autumn 2004), pp ISSN print: ISSN online DOI: / Taylor & Francis Ltd

3 310 DEFENCE STUDIES biases that can be introduced into decision-making by the cognitive shortcuts people use to cope with the complexity and ambiguity of the real world. To determine if military decision-makers violate the principles of rational decision-making and are susceptible to these biases in the same way as the civilians tested by the behavioural scientists, students on the UK s Advanced Command and Staff Course (ACSC) were tested. As students on the course are drawn from all three services and from overseas, the target population for the tests provided a broadly representative sample of military decision-makers. The results show that military decision-makers do violate the principles of rational decision-making, and do use cognitive shortcuts that introduce biases. The article also analyses more modern theories of decision-making to determine what other factors might affect risk perception and preference. It is argued that personality, experience, organisational setting and the social and cultural context are all relevant factors. It is also argued that the unique culture and ethos of the military can cause commanders to adopt consistently risk-taking or risk-avoiding behaviour. The author concludes by considering the implications of the findings and how they could be used to improve decision-making in the military. What is Risk and Why is it Important to Decision-Making? Risk is a term that is widely and frequently used, but it is clear that there is a lack of common understanding of the term. To illustrate the point, students on ACSC were asked to define the term risk. Of more than 100 responses, no two were identical, and there were wide variations in the general sense of meaning of the term. There were, however, some themes that emerged. Many cited probability, possibility or uncertainty as an element of risk. There was also a sense among some respondents that risk involved costs and benefits and that there was some kind of balance or calculation required when making decisions. Before the argument about the importance of risk to decision-making can progress it is essential to develop an agreed definition of risk. The Oxford English Dictionary defines risk in terms of both danger and the possibility that something unpleasant will occur. The word in fact derives from the early Italian risicare which means to dare. 2 The classical concept of risk has its origins in the Renaissance. In 1654 the famous mathematicians Blaise Pascal and Pierre de Fermat developed the theory of probability. Fifty years later Jacob Bernoulli proposed his Law of Large Numbers, and less than 30 years after that Abraham de Moivre suggested the structure of the normal distribution, or what is more commonly

4 THE PSYCHOLOGY OF RISK AND ITS ROLE 311 known as the Bell Curve. These discoveries together gave us the law of averages. The mathematical explanation of uncertainty through probability and the law of averages is the classical concept of risk that is the bedrock of much scientific research and economic theory. In this classical concept, risk quantifies the likelihood that a known outcome will not occur. Thus, outcomes with the same probability of occurrence carry the same risk. The disadvantage of the classical definition of risk in describing human behaviour is that it ignores the value of the outcome. The vast majority of the responses to the survey cited the outcome, in some form or another, as part of their definition of risk. Ignoring the value of the outcome in defining risk runs counter to the intuition of most people, and risk, therefore, should be considered to have two parts to it: the value of the outcome and the likelihood that the outcome will occur. This analysis is supported by other studies, and is a widely used measure of risk. 3 It is also worth noting that the intuitive construct of risk is a negative one. It would be unusual, for example, to hear someone say that there was a risk of winning the lottery. In reality, when people talk of the risk associated with a decision, they are really talking about the likelihood and impact of the desired outcome not being achieved. To understand the importance of this definition of risk in decisionmaking it is important to examine the decision-making process itself. In simple terms, decision-making involves making a choice between options. Although some modern theories cast doubt on the idea that people actually make a choice when making a decision, the idea of choice in decisionmaking is both intuitive and logical. The need to make a decision comes from the need and opportunity to move from some current condition to a future condition. This is of critical importance, because it implies that the decision-maker has to make a judgement about the future. By its very nature the future is uncertain. Therefore, in making his choice, the decision-maker must form a judgement, from the options he considers, about both the likelihood of a desired outcome occurring and the value of that outcome. Given the definition developed above that risk should be a measure of the likelihood and impact of the desired outcome not being achieved, it follows that risk is central to decision-making. Decision-Making Theory the Rational Model Having established that risk is central to decision-making, it is necessary to consider decision-making theory to demonstrate how the psychology of risk affects decision-making. The dominant paradigm in decision-making

5 312 DEFENCE STUDIES theory up until the late twentieth century was the rational model. Rational decision-making theories are sometimes referred to as normative theories, since they describe how decisions should be made. The article will distil the key principles from the theory, and demonstrate that people consistently and systematically violate them. Analysis of the results from the tests conducted as part of this research will show that these effects also influence military decision-makers. Like the classical definition of risk, rational decision-making theory was developed in the Renaissance. Daniel Bernoulli (nephew of Jacob) was asked by a group of noblemen to prescribe a rational method of gambling. 4 In answering the question he applied the laws of probability to gambling. He said that the payoff for winning should be multiplied by the probability (a decimal number) of winning, and the value of the loss (a negative number) should be multiplied by the probability of losing. These two products should then be added together. As the loss is negative, the product of the loss is effectively being subtracted from the product of the win. The result of this sum is the expected value of the bet. Bernoulli showed that if there were a choice between bets, a rational gambler should take the bet that offered the highest expected value. To illustrate the point, consider the example below: A gamble is offered as follows. If the coin comes up heads the gambler will win 200, but if the coin comes up tails the gambler will lose 100. As the probability of winning is 0.5, and the probability of losing is 0.5, the expected value of the bet = ( 100) = 50 So, on average, a gambler could expect to win 50; therefore, he should take the bet. The idea of expected value allows decision-makers to select the optimum solution, which is the key principle of the rational model. As well as providing this foundation of rational choice theory, Bernoulli also introduced the concept of utility. He proposed that the value of an outcome to an individual its utility could not be measured in absolute terms. He said that the world is full of desirable things but the amount that people are willing to pay for them differs from one person to another. 5 This insight is profound. Bernoulli had recognised that individuals have preferences, and that these would be different from one individual to another; thus, he provided the first linkage to human psychology in decision-making. Although utility theory has been developed further, and von Neumann and Morgenstern s development of Game Theory in the latter half of the

6 THE PSYCHOLOGY OF RISK AND ITS ROLE 313 twentieth century expanded rational decision-making theory into games of strategy like the prisoner s dilemma, the fundamental principles of the rational model have remained unchanged. The model requires that when making decisions people will consistently choose the optimum solution by the application of the laws of probability, irrespective of how the options are framed. What researchers have found, however, is that decision-makers consistently deviate from these fundamental principles. Consistent Violations of the Rational Model Perhaps the most influential research into how people violate these principles has come from two Israeli psychologists, Daniel Kahneman and Amos Tversky. Both served in the Israeli armed forces during the 1950s. Tversky, whose mother was a member of the first Knesset, was cited for bravery in 1956 as a paratroop captain, and Kahneman developed a psychological screening system for evaluating recruits to the Israeli armed forces. Their collaboration began in the 1960s when Kahneman described an incident that had occurred when he was teaching flying instructors instructional techniques. He was describing research that had showed that birds responded better to reward rather than punishment, and he was trying to convince the instructors that they should adopt this approach. The instructors argued that this was nonsense, since in their experience, praising a student for a good landing usually meant that the next one would be poor, whereas criticism usually ensured the next landing would be better. After some thought, Kahneman realised that the instructors were inferring a causal relationship between their reaction and student performance on the next landing. In reality, the rate of change of performance from one landing or flight to the next was so slow that the change from good to poor performance was really a matter of luck. More precisely, it was a manifestation of the principle discovered by Sir Francis Galton in the nineteenth century of regression to the mean. Because overall improvement in performance of the trainee pilots was so slow, any extreme of performance in landing was likely to return to average next time. The instructors did not recognise this and inferred some causal relationship between their response and the quality of the next landing. Kahneman and Tversky decided that it wasn t just that people lacked an intuitive understanding of regression, but that something about regression seemed to run counter to their intuitions about the ways of the world. 6 This led the two men to speculate about other ways in which people might not follow the principles of the rational model in their decisionmaking. Along with other researchers they have identified a number of

7 314 DEFENCE STUDIES circumstances in which even the most sophisticated decision-makers systematically deviate from the consistency and cold-blooded analysis required by rational decision-making theory. To determine if military decision-makers behave in the same way, some of the experiments devised by Kahneman and Tversky were modified and carried out with officers on ACSC. The tests were piloted on a small sample of officers. Slight amendments were then made before the tests were sent out to all students on ACSC. A total of 116 responses were received. One of the Kahneman and Tversky s key findings was that variations in the way a problem was framed affected the decisions made. This effect is illustrated by considering the responses received when the two problems described below were posed to ACSC students. The total number of respondents for each problem is denoted by N, and the percentage that chose each option is indicated in brackets. Problem 1 [N=62]: Imagine that you are a military commander. You are threatened by a superior enemy force. Your intelligence officers say that your soldiers will be caught in an ambush in which 600 of them will die unless you lead them to safety by one of two routes. If you take the first route 200 soldiers will be saved. [34%] If you take the second route there is a one-third chance that 600 soldiers will be saved and a two-thirds chance that none will be saved. [66%] Which route do you prefer? A second group was given the same problem, but this time the options were framed as follows: Problem 2 [N=54]: If you take the first route 400 soldiers will die. [11%] If you take the second route there is a one-third chance that nobody will die, and a two-thirds chance that 600 people will die. [89%] The two problems are, in fact, identical. The expected value is the same for both options. Despite this there is a marked shift towards the risky second option when the outcome is expressed in terms of loss (deaths) rather than gains (lives saved). This is exactly the same effect the researchers found when they carried out the experiments on Stanford University students. 7 The results show that when choices are framed in terms of losses, decisionmakers exhibit a propensity for risk-taking to avoid the loss. It would seem

8 THE PSYCHOLOGY OF RISK AND ITS ROLE 315 that a loss has a greater value than a gain. As Kahneman and Tversky put it, losses loom larger than gains. 8 Of interest is the difference in response to Problem 1 between the Stanford University students and the military decision-makers. The Stanford University students overwhelmingly (76 per cent) chose the first option, where the outcome was guaranteed. In contrast, the military decision-makers preferred the risky second option, which offered the possibility of saving all 600 lives. The reasons for the differences are not clear. It could be that changing the wording of the problem to be of direct relevance to the military audience has introduced an unintended bias. However, there is also the possibility that the responses reflect a greater readiness of military decision-makers to take risks. A second pair of problems similar to the one described above was also posed as part of the tests with ACSC students. This time the problem was framed in terms of a gamble. Problem 3 [N=116]: You have a choice between two options; indicate the option you prefer: A. A sure gain of 240. [65%] B. 25% chance to gain 1000, and 75% chance to gain nothing. [35%] Problem 4 [N=116]: You have a choice between two options; indicate the option you prefer: A. A sure loss of 750. [10%] B. 75% chance to lose 1000, and 25% chance to lose nothing. [90%] The responses to this set of problems illustrate the preference for the certain outcome originally observed when the problem is framed in terms of gains, albeit the tendency is still not as strong as that observed by Kahneman and Tversky. There is also a similarly strong shift to a risk-taking approach when the problems are framed in terms of losses. Thus, the results from this second set of problems reinforce the conclusion that military decision-makers like the Stanford University students will take greater risks when the problems are expressed in terms of losses. Wever, the interesting question of whether military decision-makers do adopt a more risk-taking approach when lives are at stake remains unanswered. This is particularly interesting given Kahneman and Tversky s findings that the effects of framing were greatest in problems involving human life. If the results do indicate a propensity for risk-taking among military decision-makers the reasons are also not clear. Perhaps the military subjects

9 316 DEFENCE STUDIES are less susceptible to the emotional response to death, or maybe their training and experience have taught them to take risks. No firm conclusion can be drawn from the evidence available from the tests, and more detailed research would be required; however, as analysis later here will show, there are reasons why military commanders might adopt risk-taking behaviour. To explain their observations on how problems were framed, Kahneman and Tversky proposed what they call a value function, similar to Figure 1 shown below. The much steeper slope of the value function for losses than for gains describes the finding that losses loom larger than gains, and explains the readiness to accept greater risks where losses are involved. The hypothetical value function also implies the importance of the reference point from which the value of the gains or losses is judged. This is a further key finding. Because the value function is not symmetrical, where the decision-maker perceives his current position to be on the value function will affect his view of the value of any future real gain or loss. Figure 1 This phenomenon is well illustrated by considering the choices facing a gambler at a horse race. 9 The gambler has lost 150 during the day, and is considering a 10 bet on a 15:1 outsider in the last race of the day. The decision can be framed in two ways. First, the bet could be considered without reference to the events of the afternoon, so the choice would be between a possible loss of 10 or a gain of 150. Alternatively, the position could be considered with reference to the losses of the afternoon, that is a choice between a last chance to return to the reference point at the start of the day, or an increase in the day s losses to 160. If the decision-maker s frame of reference takes into account the losses of the afternoon, he will have a losing frame of reference and consider himself to be on the loss side of the value function. Because of the steepness of the slope, the decision- Value +ve Losses Gains -ve FIGURE 1

10 THE PSYCHOLOGY OF RISK AND ITS ROLE 317 maker s perception of the value of the possible gain of 150 would be greater than if he considered his reference point without reference to the afternoon s losses. This implies that the decision-maker is more likely to take a riskier bet if he adopts a losing frame of reference. This suggestion is supported by the evidence that shows that bets on outsiders are most popular on the last race of the day. 10 It has also been argued that General Dwight D. Eisenhower s decision to adopt a risk-taking approach when approving Operation Market Garden in 1944 is best explained by the losing frame of reference he had developed because of slow progress against his original plan. 11 The effect of framing of decisions and people s inability to ignore what has gone on before, or what might be called sunk costs, also manifests itself in other ways. Richard Thaler, an academic economist, has worked with Kahneman and Tversky in studying some of these phenomena. Thaler s initial interest came while working on his dissertation for his doctorate. His subject was the value of human life. He asked people how much they would be willing to pay to eliminate a one in a thousand chance of death and how much people would want to be paid to accept a one in a thousand chance of death. The results were startling. A typical response was I wouldn t pay more that $200, but I wouldn t accept an extra risk for $50,000! 12 Thaler labelled this phenomenon the endowment effect, 13 to describe the extra value people place on something they already own or, perhaps more relevant to the military context, for something they had already fought to gain. The researchers also identified another psychological effect that they dub mental accounting. 14 To illustrate the principle, and to identify if those in the military reacted in a similar way, one of following questions was posed to two groups. 15 Problem 1 [N=62]: Imagine that you have decided to see a play where admission is 20 per ticket. As you enter the theatre you discover that you have lost a 20 note. Would you still pay the 20 for a ticket to the play? (Assume you have enough cash left to do so). Yes [98%] No [2%] Problem 2 [N=54]: Imagine that you have decided to see a play and have bought a ticket for 20. As you enter the theatre you discover that you have lost your ticket. You cannot remember the seat number, so you cannot prove to the management that you bought a ticket. Would you spend 20 on a new ticket? (Assume you have enough cash to do so). Yes [78%] No [22%]

11 318 DEFENCE STUDIES There is a marked shift between the responses to the two questions even though the net effect on the decision-maker s financial situation is identical. Kahneman and Tversky propose that the purchase of the new ticket in the second problem was charged to the mental account set up when the first ticket was bought. Interestingly, the effect among the ACSC students was not as strong as in the original tests, where almost half the respondents chose not to buy a new ticket in the second problem. This may be a reflection of the difference in wealth between the ACSC students tested and the students in the original tests, or it might be a reflection of less susceptibility to the effects of mental accounting among the military decision-makers. As well as the behaviour observed in Kahneman and Tversky s experiments, real life also provides further evidence of the ways in which people do not conform to the principles of rational theory. The rational choice model requires decision-makers to choose the option with the highest expected value. However, this does not necessarily represent the most likely outcome or the outcome that might deliver the largest return. Interviews with gamblers reveal that they do not think in terms of maximising expected value; indeed, most casino games have a negative expected value in the long term. 16 If gamblers acted rationally they would not go to casinos, instead they rely on cheating the law of averages: they rely on luck. Of even more significance, however, is the reaction of people to unique gambles. The researchers offered pairs of gambles to individuals and asked them to choose the one they would prefer to play. The gambles were designed so that the gamble with the higher expected value had the lower probability. The participants were then split into two groups with one group given the opportunity to play the gamble only once, and the other group able to play the gamble ten times. When the gamble was unique, 68 per cent of the participants chose the gamble with the higher probability. However, when participants were allowed to play the gamble repeatedly, 67 per cent chose the gamble with the higher expected value. These findings suggest that people are unlikely to make decisions in terms that maximise the expected value when the decision is unique. Although this behaviour is not rational in normative theory terms, the findings reveal that people seem to have an intuitive understanding of the limitations of the rational choice model when decisions are unique. The examples cited here illustrate some of the key ways in which the framing of a problem or the uniqueness of the decision can cause decisionmakers to violate the axioms of rational decision-making. The tests that were conducted strongly indicate that military decision-makers are affected by the

12 THE PSYCHOLOGY OF RISK AND ITS ROLE 319 way problems are framed in the way Kahneman and Tversky s findings predict. The apparent risk-taking approach observed among military decision-makers in problems involving the loss of life gives the first indication that there are other factors that affect a decision-maker s response to risk. By examining decision-making in the real world, more of these factors will become apparent. Decision-Making in the Real World The tests devised by the researchers and described above show how decision-makers behave in laboratory gambles where the probability and outcomes are known. The real world is a far more complicated place than that represented in the experiments. One of the ACSC subjects tested put this rather succinctly when he described the scenario for the problem concerned with the loss of life as ludicrous, because you are unlikely to be able calculate the risk in those terms. He is right. Military decisionmakers are faced with problems that are complicated, often ambiguous and unique. Because the problems are unique, there are no actuarial tables available to tell the decision-maker the probability of a particular outcome. The ambiguity and complexity also make it difficult for decision-makers to determine what the possible outcomes might be, let alone the value he assigns to them. Perhaps inevitably the great military strategist Clausewitz identified this almost two centuries ago when he said, absolute, so-called mathematical, factors never find a firm basis in military calculations. 17 It is clear that people in the real world often do not follow the principles of rational decision-making theory. 18 Consider, for example, randomly selecting ten churches where marriages are being conducted one Saturday afternoon in the summer. The best man from one of the churches is asked how many of the couples he would expect to be together in ten years time. If he were to consider the average number of divorces that occur within the first ten years of marriage he would be able to give a rational answer. If, however, he were asked to consider the likelihood that the couple for whom he had been best man would still be together in ten years time, the answer might well be different. Normative theories require the best man to apply the same probabilistic estimate in this second case, but in reality, he is likely to consider a host of other factors based on his knowledge of the couple and their situation. Normative theory would brand him irrational, but there is no reason to believe that by applying other factors, the best man s judgement will be worse; indeed, there is every reason to believe that it might be better.

13 320 DEFENCE STUDIES This kind of example, as well as the observations of the behavioural scientists, has led to the development of naturalistic theories of decision-making. These theorists argue that instead of doing probability calculations badly, decision-makers are doing something else entirely. 19 Gary Klein has conducted a significant programme of research on decision-making in the military environment. 20 He believes that the dynamic, uncertain, complex and vague situations military commanders often find themselves in are not well suited to applying the rational models of decision-making. Klein suggests that decision-makers arrive at their decision by matching the scenario they face to one previously experienced. If the solution arrived at is plausible, it is adopted, but it is not necessarily optimised, as normative theory would require. The recognition-primed decision-making Klein describes has the advantage that most of us can see ourselves doing it. 21 The value of this more intuitive decision-making style to the military environment has been debated for some years. Some, like Brigadier Kerr, have made a strong case for its benefits, and for the need to develop the intuitive capabilities of future commanders. 22 Faster decision-making, recognition of the role of the expert and improved likelihood of achieving far more creative or innovative solutions are attractive features of intuitive decision-making. 23 For the moment the argument has been won, with the British military now recognising the role of intuition in decision-making. However, despite its benefits, the cognitive shortcuts, or heuristics, that it relies on can produce serious and systematic biases that degrade the quality of the decisions made. Heuristics, Biases and Further Problems with Rational Choice In defence of the criticism levelled at Kahneman and Tversky for their laboratory decision-making tests, they do acknowledge the weaknesses of their scenarios. Along with other researchers, they have expanded their research to consider how the heuristics that decision-makers employ cause them to violate the principles of normative theory. The researchers have grouped the biases that these heuristics cause under three broad headings: representativeness, availability, and anchoring and adjustment. 24 Each of these is considered below to demonstrate the potential psychological effects that could influence military decision-makers. In investigating the representativeness heuristic, the researchers found that people systematically violated the laws of probability and based their judgements on how closely an option resembled the problem scenario. To determine if military commanders behaved in a similar way, ACSC students were posed the following question. 25

14 THE PSYCHOLOGY OF RISK AND ITS ROLE 321 [N=116]. Linda is 31, single, outspoken and bright. She studied philosophy at university. As a student she was deeply concerned with discrimination and other social issues, and participated in antinuclear demonstrations. Which statement is more likely. A. Linda works in a bank. [46%] B. Linda works in a bank and is active in the feminist movement. [54%] The laws of probability are such that the likelihood of two uncertain conditions occurring together is less than the likelihood of either happening alone. The first proposition is, therefore, more likely, yet more than half the respondents considered the second statement to be more likely. People do this because the idea that Linda could be active in the feminist movement is more representative of the description of her concern for social issues. The availability bias occurs when people judge the likelihood of something happening by how easily they can retrieve similar examples to mind. If an outcome is vividly imaginable, the probability of its occurrence is likely to be overestimated. This effect has enormous importance for public policy, and is one of the reasons for the over-emphasis by the media and public on large-scale disasters such as train crashes. Paul Slovic has written extensively on the subject of societal risk-taking and makes the point that vivid accidents are easier to picture in the mind. This helps explain why detailed safety studies are rarely convincing to the public. As Slovic says, the very act of telling somebody about a low-probability catastrophe and going through the fault tree to show why it s improbable may make the accident more imaginable and memorable, and thus seemingly more likely. 26 It follows that the description of an event is of enormous importance to a decision-maker s perception of risk. Tversky believes that probability judgements are attached not to events but to descriptions of events. 27 To illustrate this point he asked students to assess the likelihood of various possible causes of death. This experiment was repeated as part of this research. The results indicate that military decision-makers display the same strong tendency to over-estimate the probability of violent deaths. This effect has important implications for the military decision-makers, particularly in the operational environment. In this environment it is necessary for the commander to contemplate and, through the estimate process, describe death on a potentially catastrophic scale. The findings suggest that the very act of considering and describing the outcome could affect a commander s perception of probabilities and so affect his decision-making.

15 322 DEFENCE STUDIES Vertzberger has developed the concept of the availability heuristic further and argued that the salience of a particular outcome to the context in which the decision is being made, is also important to a decisionmaker s perception of risk. 28 He argues that highly salient risks loom larger in the minds of decision-makers. The limited cognitive capacity of humans means that in the end, risk analysis is bound to be limited and selectively biased toward the most immediate, vivid and salient risk dimensions. 29 Not only does this imply that highly vivid and salient risks can dominate a decision-maker s thinking, it can also result in premature cognitive closure, which makes the decision-maker insensitive to alternative courses of action or information that runs contrary to his view of the world. The effect of anchoring and adjustment is the final bias that Kahneman and Tversky identified. Their research found that people refine estimates by adjusting their starting point. 30 The starting point might be arrived at from the initial framing of the problem, or it might be the result of intuition, some partial calculation, or simply a guess. The problem the researchers identified was that in either case, the decision-maker does not adjust sufficiently from this initial anchoring point. It is clear then that the gut feel, or early work could have a significant effect on the final estimate. The effects described above could have important implications for military commanders. It is reasonable to conclude that the detailed analysis and planning that is done as part of the estimate process could introduce biases that affect the decision-maker s perception of risk. Detailed analysis might, for example, cause an overestimate of probability by increasing the vividness of an outcome. Alternatively, planning might cause fixation on the most salient risks, even if they are not the most important. Similarly, the commander s initial, intuitive, mission analysis conducted at the start of the estimate process might provide an inappropriate anchor for the development of a final estimate. Interestingly, detailed planning can also have the effect of reducing the perceived risk by increasing familiarity with the problem, the associated risks and the courses of action that will be adopted. With this familiarity comes a feeling of control, and there is strong evidence to suggest that this reduces the decision-maker s perception of risk and effectively increases his propensity to take risks. 31 Confidence can also reduce sensitivity to what could go wrong, and there is a strong tendency for the plan to become an anchoring point, which causes decision-makers to make real events fit the plan. Vertzberger sums up the potential biases that detailed planning can introduce neatly when he says, a well prepared plan absorbs risk awareness. 32

16 THE PSYCHOLOGY OF RISK AND ITS ROLE 323 Naturalistic Decision-Making Theories and Their Implications The biases and deviations from normative theory considered so far have illustrated the ways in which decision-makers can be misled by the way a problem is framed and the effect that the heuristics people use to make decisions can have on their perception of risk. It is also apparent that there are other softer influences on the perception of risk. The different response of decision-makers to the same risk is, however, only partly explained by the perception of risk. It is clear that people have different preferences for risk. Some people are more risk-averse or risk-taking than others. The idea of recognition-primed decision-making has already been introduced, but this is only one naturalistic theory of decision-making. In this section the main naturalistic decision-making theories will be reviewed to develop a model that identifies the psychological factors that influence risk perception and preference. Klein s recognition-primed decision-making model has much in common with the Argument Driven Action model proposed by Lisphitz. 33 As with Klein s model, matching stored knowledge of similar situations generates the initial solution. In Lisphitz s model, any uncertainty in the suitability of the solution generates the need to modify the solutions, which the decision-maker does by considering the arguments for and against the course of action. It follows that an individual s experience will be key to his understanding of the situation, his perception of the outcome and the likelihood that it will occur. It is logical, therefore, that an individual s experience will be critical to how he perceives the risks associated with his decision, both in terms of outcome and probabilities, as well as in what level of risk he is prepared to accept. Organisations in which decision-makers work also have experience, and this can bolster personal experience if it is absorbed by people through training, history and ethos. The hypothesis that organisations affect decision-making is further reinforced by the Nobel laureate Herbert Simon s work in the 1940s. He concluded that decision-making in organisations is strongly influenced by the structure and norms of the organisation. 34 A further group of naturalistic models of decision-making that backs up this analysis are the narrative-based models. There are subtle variations between the theories, but the principle remains consistent. The theories postulate that a decision-maker tries to construct a causal model for the situation he finds himself in. A story is constructed to explain the situation, and is then used to make a forecast about the future. The decisionmaker chooses the option that best fits the model he has constructed.

17 324 DEFENCE STUDIES Clearly, in creating the story to explain events, decision-makers will be limited in their ability to do this by their view of the world. Once again, therefore, personal experience, organisational setting and organisational experience will play a part. It also follows that broader cultural factors can influence an individual s view of the world, and hence his ability to build the causal model that he uses to make his decision. The final group of naturalistic theories considered here are moral and ethical explanations of decision-making. These theories of decisionmaking are based on the premise that behaviour is influenced by bedrock beliefs. As Beach suggests, even casual observation and introspection show that morals, ethics, ideologies, beliefs and values all have an influence over the way humans behave. 35 Amitai Etzioni conducted one of the most influential pieces of research in this area, and identified three broad influences on decision-making. The first was utility of the outcome a rational view of the world, the second were social influences, and the third were deontological influences that reflect an individual s internal moral and ethical views. As yet there is no unifying theory of decision-making, but the analysis of the main naturalistic theories has revealed some broad areas of influence over risk perception and preference. First, it is clear that an individual s experiences and personality will affect his perception of the value he assigns to the various outcomes and probabilities, and his preference for risk. Second, the organisational setting, in terms of group norms, expectations and experience are also likely to have an influence. Finally, the roles of the social and cultural context in which decisions are made are important factors. The role these three broad areas of influence have in the military context must now be considered. Further Influences on Military Decision-Makers Taking personality first, researchers have found it difficult to distinguish the role of personality in affecting preferences for risk from other influences like age, sex and particularly the situation, because of the interplay between these influences and personality. 36 It is quite apparent, for example, that the propensity for risk-taking reduces with age, but it is also true that personality changes as people get older. 37 Despite the difficulties, the research offers some interesting insights that are particularly relevant to the military environment. One of the key areas of research considers the effects of personality in situations that involve physical risk. Studies often consider the personality types associated with

18 THE PSYCHOLOGY OF RISK AND ITS ROLE 325 those who take health risks and those who take part in high-risk sports. 38 Participation in high-risk sports has more in common with risk in the military environment and so offers more clues to the role personality plays in the perception of risk among military decision-makers. Llewellyn s research suggests that those inclined to accept greater risk are more likely to be male, have high emotional stability, high levels of self-confidence and have a propensity for sensation seeking and physical risk-taking. 39 Many in the military would recognise themselves in this description. Indeed, even a cursory review of recruitment advertisements for careers in the military leads to the conclusion that this is the kind of person the military is trying to recruit. For further evidence that commanders exhibit the personality traits associated with risk-taking, the results of psychometric tests carried out by Bartle on British military staff at the Royal Military College of Science at Shrivenham were examined. 40 Although psychometric testing has some limitations, 41 it is generally regarded as a useful measure of the main personality traits. Bartle s results demonstrate that military officers show a significantly greater propensity to be extrovert than the rest of the UK s male population. The extrovert personality type is associated with the emotional stability and self-confidence identified by Llewellyn as a predictor of risk-taking behaviour, and so provides further proof that military decision-makers are more pre-disposed to take risks. A corollary of an increased propensity for risk-taking is the increased likelihood that people who display this tendency will seek higher risk environments. The experience gained by exposure to these environments and the feeling of control that comes from successfully beating the risk are also likely to increase the tendency to take risks. The military provides the opportunity to experience high-risk environments, which may exacerbate military commanders risk-taking tendencies. Although the difficulties of assessing the exact role of personality in risk-taking behaviour are acknowledged, the evidence does point to the conclusion that some military decision-makers have a stronger preference for risk-taking than the population as a whole and that this tendency may be compounded by experience gained in the military. An argument can also be made that the military s unique culture, in terms of its powerful group norms, expectations and experience, has the effect of increasing military decision-makers propensity to take risks. The military glorifies the heroic deeds of the past, and invokes these memories and expectations to motivate men to expose themselves to huge personal risk, as the King s speech to his troops on the eve of battle in Shakespeare s

19 326 DEFENCE STUDIES Henry V illustrates. These norms and expectations are vital to the moral component of fighting power, but military decision-makers should also be aware of the possible psychological effect that the culture of heroism and glory can have on decision-making, particularly in environments where the level of physical risk might be low, but where the military decision-maker has to assess other types of risk such as financial or project risk. Organisational culture can also have a more subtle effect on perpetuating particular types of behaviour. Norman Dixon in his book On the Psychology of Military Incompetence cites this effect in reaching his rather depressing conclusion that the culture of the military attracts certain personalities that are pre-disposed to incompetence in the uncertain, complicated and high pressure environment that military commanders find themselves in. In contrast to the argument outlined in the previous paragraph, Dixon argues that the culture is perpetuated by a hierarchical system that promotes those that conform, and where fear of failure in the race for promotion leads to a passion for adhering to the rulebook and choosing the safe course of action. 42 Although the strength of his conclusions on the evidence he has provided has led some to suggest that he has taken a rather one-sided view of a minority, 43 a moment s reflection on personal experience would lead many to conclude that the culture of an organisation and the expectations of peers and superiors does affect one s actions. Thus, if those in the military felt that the culture of the organisation encouraged risk-taking or riskaversion, there would be a tendency for decision-makers to adjust their behaviour to meet the perceived expectations. To explore the implications of this conclusion for today s British military, ACSC students were asked whether they thought the British military encouraged a risk-averse approach to decision-making or a risk-taking approach. Some of the results are startling. Less than 10 per cent of the respondents felt that there was no encouragement either way, and that the risk taken should be based on an assessment of the situation. More than half of the respondents, however, felt that risk-aversion was encouraged. This contrasts markedly with only 15 per cent who thought the military encouraged risk-taking. It was also interesting that several respondents commented that the risk-averse culture was linked to career progression and the fear of failure. One officer, in common with many others, commented that the risk-averse culture is synonymous with our hierarchical system, in that you have been able to get on and well by playing it safe. Students on ACSC represent the top 25 per cent of their peer group, and have prospered under the current system. Their responses provide a strong

20 THE PSYCHOLOGY OF RISK AND ITS ROLE 327 indication that there is a culture of risk-aversion in the British military today, and some believe that Dixon was right in suggesting that the culture is perpetuated by a promotion system that rewards those who play it safe. Several of the respondents suggested that the culture of risk-aversion had developed over the past decade or more, and it is interesting to speculate whether the perception of a risk-averse culture in the British military is a reflection of the evolution in society at large of what academics are calling the precautionary principle. In his excellent book on government and public responses to the largely groundless health fears of mobile telephones, Burgess argues convincingly that there is a culture within government, fuelled by media representation of society, that leads public policy-makers to adopt a position of zero tolerance for risks, even when the risks are, for all practical purposes, negligible. 44 Given that the military is a public body controlled by government, the idea that any risk-averse culture in the military is a reflection of a broader political culture seems plausible. Indeed, several respondents expressed the view that the legislative changes like Health and Safety law had played a part in the development of a risk-averse culture. Irrespective of the causes, a culture that encourages military decisionmakers to avoid risk has significant implications for commanders. The results also revealed a view among around 15 per cent of the respondents that risk-aversion was encouraged in peacetime training, whereas a risk-taking approach was encouraged in wartime. Some also suggested that the risk-averse culture extended into Peace Support Operations. These responses may be a reflection of respondents definition of risk. If they defined risk in terms of danger, they might well draw the conclusion that risk-taking was encouraged in traditional warfighting, but not in other environments. Analysis of the definition of risk these respondents offered does not, however, support this hypothesis. An alternative explanation might be that the increased uncertainty and importance of the outcome in war increases the perception of risk. In peacetime training or in peace support operations the status quo is a more satisfactory state than it is in war; radical change is not essential. In war, radical change from the status quo is likely to be necessary to achieve the objective. As the size of the step away from the status quo increases, so does the uncertainty associated with any decision. As risk is a measure of both the value of outcome and likelihood, it follows that decisions in wartime do have more risk associated with them. Given that success is everything in war, it is perhaps inevitable that a risktaking approach is thought to be encouraged in war and risk-aversion in peacetime and non-warfighting operations. It might also be that this