Meet the researcher: Avri Bilovich, David Tuckett & Samuel Johnson

Posted on March 01, 2019

Selected for the TFI long-term research grant! Dr. Avri Bilovich, Prof. Dr. David Tuckett & Dr. Samuel Johnson will investigate how numbers can create an illusion of “certainty” in financial decision making. Does the presence of numerical information bias us? Who are the researchers, what is their project about and what motivated them to apply?

While the outcomes of investments are fundamentally uncertain, great pressure exists among financial consultants and fund managers to remove clients’ doubt and anxiety correlated with the decision to invest or not. This situation is often dealt with by using various tools that create an illusion of “certainty”. For example, communicating precise numerical values for the risk of portfolio variation can be a form of reassurance. The aim of this study is to uncover the interplay between numerical information (both precise and imprecise), the surrounding information context, and the subjectively perceived uncertainty and excitement people experience when making financial decisions.

We will use an experimental approach centered on different ways of displaying, both numerically and not, the implicit uncertainty within financial communications. We hypothesize (1) that the presence of numerical information biases decision-making, by making individuals more likely to invest, with the erroneous belief that the returns are more certain, and (2) that this bias can be reduced by explicit exploration of the uncertainty context. This novel research project, and the guidelines for financial communications that it will output, will have direct impact on individuals, by improving their financial literacy, and thus empowering them to make better decisions.

“The aim of this study is to ensure that people are given information in a way that allows them to make less biased and better informed financial decisions.”

What was your motivation to apply for the Think Forward Initiative research grant?

We have chosen to apply for the Think Forward Initiative research grant in order to ensure that our findings reach the most relevant audience. The TFI is in the position to implement our findings in an impactful manner and directly improve people’s financial well-being. Knowing that we will be disseminating our findings to the TFI community will, in our opinion, ensure that the outcomes are practical, and allow us to interact with decision makers who can implement our research into practice.

How do you expect that your research will contribute to people’s financial well-being?

We expect our research to be relevant to financial organisations, as well as any other organisation which needs to communicate risk and uncertainty. By changing their communication practices, based on our findings, these organisations will be able to increase financial and risk literacy for their clients. More specifically, financial institutions and regulators will be able to ensure that people are given information in a way that allow them to make less biased and better informed financial decisions. Increasing customers’ financial literacy, will also increase their conviction regarding their financial decisions, thus making them more resilient to short term movements in the markets. Finally, our advances into the better communication of uncertainty, can be used as part of a larger behavioral change intervention to increase financial literacy, thus empowering people to make better informed decisions, rather than nudging them.

Avri Bilovich is a research associate at the Centre for the Study of Decision-Making Uncertainty at the University College London. He holds a PhD in Behavioural Science from Warwick Business School a has also worked for institutions outside academia, including the Behavioural Design Lab (UK) and Gallup Pakistan. His research interests involve preference elicitation, decision-making and introspective access.

David Tuckett is full professor in Economics, Medical Sociology and Psychoanalysis and director of the Centre for the Study of Decision-Making Uncertainty at the University College London. He won the 2006 Leverhulme Research fellowship and has published various books and articles in sociology, psychoanalysis, economics, and finance. He is a former president of the European Psychoanalytic Federation and editor in chief of the International Journal of Psychoanalysis.

Samuel G.B. Johnson is assistant professor at the University of Bath School of Management. He holds a PhD in Psychology from Yale University and was awarded the Glushko Dissertation Prize from the Cognitive Science Society in 2017. He investigates how the minds of individuals give rise to emergent economic order. He specifically focuses on the tools that consumers, investors, and voters use to process information and overcome their cognitive limitations.