Award-winning psychological research has underpinned the development of Electronic Financial Advice software which delivers computer-based feedback on financial decisions, leading to commercial research spinouts.
- The research project led to the founding of Decision Technology Ltd, a part-academic, part-commercial research group dedicated to the study of human decision-making and the development of any associated products.
- One of Decision Technology's major projects has continued the research work funded by the ESRC. It is developing an electronic financial advisor – a computer-based system that will help people who cannot afford financial advice, or would not normally seek it, to manage their finances better.
- The group is engaged in several long-term commercial projects in areas such as electronic financial advice and market forecasting, working with some of the biggest and most highly regarded companies in the world.
About the research
Award-winning psychological research, led by Professor Nick Chater of the People at the Centre of Communication and Information Technologies Programme, has underpinned the development of Electronic Financial Advice (e-advice) software, which delivers computer-based feedback on financial decisions.
The research set out to develop a better understanding of how people assess and react to risk when making financial decisions. The study identified the basic cognitive processes involved in financial decision-making by investigating how people view financial information, and whether personality traits such as risk aversion affect decisions. It also examined the effect of context on financial decision-making, for example the range, magnitude and number of available options.
The research created a new model showing how people assess risk in order to arrive at financial decisions. This enabled the research team to develop Electronic Financial Advice software, which in turn allowed them to produce a prototype electronic financial advice system based on user behaviour and computer-based feedback on financial decisions.
A new cognitive model of decision-making under risk was developed alongside the prototype online financial system. The commercial spin-out company Decision Technology set up as a result of the project provides a range of research for the private sector, particularly the financial and retail sector.