Erosion of Trust: Numeracy and Forecast Guidance in a Cost-Loss Game
Even the very educated, unless it is in their area of expertise, do not understand the complexities of the models they rely on to inform decisions about finances and other business decisions, weather and climate, health, nutrition and medical care. Many of the important decisions forecast information informs are cost-loss in nature: The decision maker can choose to take a risk of a loss or avoid the risk by choosing costly preventative action. An earlier paper showed that forecasts suffer from a cry wolf effect: roughly, when a forecast is wrong, people are less likely to pay attention to the forecast in the future. Here we investigate how decision maker numeracy relates to cry wolf.