A psychological model of collective risk perceptions

Decades of research seek to understand how people form perceptions of risk by modeling either individual-level psychological processes or broader social and organizational mechanisms. Yet, little formal theoretical work has focused on the interaction of these 2 sets of factors. In this paper, I contribute to closing this gap by modifying a psychologically rich individual model of probabilistic reasoning to account for the transmission and collective emergence of risk perceptions. Using data from 357 individuals, I present experimental evidence in support of my main building assumptions and demonstrate the empirical validity of my model. Incorporating these results into an agent-based setting, I simulate over 1.5 billion social interactions to analyze the emergence of risk perceptions within organizations under different information frictions (i.e., limits on the availability and precision of social information). My results show that by focusing on information quality (rather than availability), groups and organizations can more effectively boost the accuracy of their emergent risk perceptions. This work offers researchers a formal framework to analyze the relationship between psychological and organizational factors in shaping risk perceptions.