LITERATURE REVIEW 
 
   THE PSYCHOLOGY OF DECISION 
   MAKING UNDER UNCERTAINTY 
   A LITERATURE REVIEW 
    
     May 2019 
            
                   
                   This document was produced for review by the United States Agency for International Development. It was prepared by 
                   the Climate System Analysis Group at the University of Cape Town and Chemonics International for the Adaptation 
                   Thought Leadership and Assessments (ATLAS) Task Order No. AID-OAA-I-14-00013, under the Restoring the 
                   Environment through Prosperity, Livelihoods and Conserving Ecosystems (REPLACE) IDIQ. 
                    
                    
                   CSAG Contact:                                Chemonics contact:  
                    
                   Anna Steynor, Head of Climate Services       Chris Perine, Chief of Party 
                    
                   (asteynor@csag.uct.ac.za)                    (cperine@chemonics.com) 
                    
                   Climate System Analysis Group                Chemonics International Inc.  
                   Environmental and Geographical Science       1717 H Street NW  
                   University of Cape Town                      Washington, DC 20006 
                   Rondebosch, 7701                              
                    
                    
                   ATLAS reports and other products are available on the Climatelinks website: https://www.climatelinks.org/projects/atlas 
                    
                   Cover Photo: Sandra Coburn, USAID/Zambia Tenure and Global Climate Change Project.  
                    
                       
         THE PSYCHOLOGY OF DECISION-
         MAKING UNDER UNCERTAINTY 
         A LITERATURE REVIEW 
          
         May 2019 
          
          
         Prepared for:  
         United States Agency for International Development  
         Adaptation Thought Leadership and Assessments (ATLAS) 
          
          
         Prepared by: 
         Lorena Pasquini, Anna Steynor, and Katinka Waagsaether of the Climate System Analysis Group 
         (CSAG) of the University of Cape Town 
          
         Chemonics International 
          
        This report is made possible by the support of the American people through the United States Agency for 
        International Development (USAID). The contents of this report are the sole responsibility of the Climate System 
        Analysis Group and do not necessarily reflect the views of USAID or the United States government. 
        Neither the University of Cape Town, nor its affiliates, nor their third-party providers guarantee the accuracy, 
        completeness, timeliness, or availability of any information provided in this report. The University of Cape Town, 
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         CONTENTS 
         CONTENTS ··································································································· 1 
         LIST OF TABLES ··························································································· 1 
         EXECUTIVE SUMMARY ·················································································· 2 
              Factors Impacting Individual Decision-Making ................................................................. 2 
              Factors Affecting Group Decision-Making ........................................................................ 4 
              Strategies to Deal with Uncertainty .................................................................................. 4 
              Conclusions ..................................................................................................................... 5 
         1. INTRODUCTION ························································································· 6 
         2. THE PSYCHOLOGY OF DECISION-MAKING UNDER UNCERTAINTY ················ 8 
              Introduction ..................................................................................................................... 8 
              The Construct of “Uncertainty” in Decision-Making .......................................................... 9 
         FACTORS AFFECTING DECISION-MAKING ·····················································10 
              Individual Decision-Making Context ............................................................................... 10 
              Group Decision-Making Context .................................................................................... 24 
         3. STRATEGIES TO DEAL WITH UNCERTAINTY ··············································31 
              Adaptive Risk-Management Strategies .......................................................................... 31 
              Choosing Among Actions with Uncertain Outcomes: Normative Models versus 
              Descriptive Models/Reality ............................................................................................ 33 
         4. CONCLUSIONS AND WAY FORWARD ·························································37 
         5. REFERENCES ··························································································38 
         LIST OF TABLES 
         Table 1. Classification of Uncertainty ......................................................................................... 9 
         Table 2. A Summary and Comparison of Formats of Climate Change Games ..........................20 
          
                            
              LITERATURE REVIEW: THE PSYCHOLOGY OF DECISION-MAKING UNDER UNCERTAINTY | 1