Ambiguity Effect

We choose known options over unfamiliar ones.

What is it?

We do not like uncertainty. As a result, when we make choices, we pick options that we think are most likely to give us favourable results. In other words, due to the Ambiguity Effect, we tend to choose options we saw working in the past rather than options with unknown probability. Our brain skips the hard part of estimating unfamiliar possibilities.


What impact does it have on our decisions and actions?

The Ambiguity Effect can influence all decisions, from routine personal choices to critical business decisions. Even though a current system is not optimal, sticking with it feels safer than implementing change. When the Ambiguity Effect is at work, we choose familiar products or services over unfamiliar ones, even if the unfamiliar ones might give us better results. It can force schools, companies, and governments to remain committed to failing systems. The Ambiguity Effect is different from Risk Aversion. The Ambiguity Effect kicks into action when we are familiar with the probability of only one of the two or three options in front of us.


How can we teach our students to avoid it?

Research suggests that we can help students overcome the Ambiguity Effect by teaching them to practise mindfulness and self-reflection. Mindfulness allows us to recognize the cause and nature of our emotions, helping us identify and respond to the fear of the unknown in our decision-making process. We also must teach our students to define their goals while working on something uncertain. Defining and clarifying goals will help us in two ways. First, they help us to reframe problems in their context. Second, they allow us to decide what we want to do based on the outcomes we listed as a part of our goals.

 

This post on is from a #TeachwithInnerkern series.


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