The Role of Capability Assessments for Decision Making

Abstract: When experience is insufficient or not present at all, making decisions becomes difficult. Capability assessments are tools to inform decisions in all situations regarding risk management, but the use of them in Sweden is discussed. With experiments made in the microworld MikroRisk, conclusions can be made about the investment patterns induced by a capability assessment under the conditions of both low and high probability of destructive events. Considering low probability, a capability assessment increases the tendency to invest in capability. For high probability, there is no particular change in investment patterns when there is access to a capability assessment compared to when there is not. The mean performance in the microworld was the same regardless of access to a capability assessment or not, i.e. a large investment in capability was not necessarily a better decision in terms of performance. However, there was a decrease of diffusion when a capability assessment was available, both in the investments and in the performance – which is notable when discussing the further use of capability assessments in Sweden.