Ambiguity Effect: Avoiding Decisions From Uncertainty

Introduction

There are two teachers teaching the same English class. You are familiar with one teacher because your brother took his class when he was a freshman and passed with an A. You have never met the other teacher and don’t know anyone who has taken his class. Rather than risk failing the class, you decide on the class with the teacher your brother took a class with.

Here’s Why

You probably decided on the teacher that your brother knew because we tend to rely on what is comfortable and familiar to us. In other words, we have a tendency to avoid making choices that involve uncertainty.

The Ambiguity Effect

When decision-making is affected by a lack of information, it is known as the ambiguity effect.

The History

In 1961 while completing his Ph.D. in economics, Daniel Ellsberg coined this term. His dissertation on decision theory was based on a set of thought experiments that showed that decisions under conditions of uncertainty might not be consistent with individual beliefs; this became known as the ambiguity effect.

Applying It

We tend to rely heavily on news and social media to learn about the things happening in our country and around the world. Often, we create an image of people, cultures, countries, etc. based on things we “know” from these outlets. Later, we use this information when voting; if we don’t know much about a bill or candidate, we might make a decision based on what has been presented to us in the media. Although it is comfortable to vote for something you think you know much about, it is vital to research all options in order to make the most informed decision.

Think Further

  1. Think of a time in which you had to decide on something without knowing much about it. How did that make you feel?
  2. Can you think of a time in which you decided on the option you knew the most about originally, but then changed your decision after learning more?
  3. Why do you think you made this choice? What are things that can happen if you choose something you don’t know much about? Can those things happen if you select the option you know most about?

Teacher Resources

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Learn More

  1. Anand, Paul (1993). Foundations of Rational Choice Under Risk. Oxford University Press. ISBN 0-19-823303-5.
  2. Borcherding, Katrin; Laričev, Oleg Ivanovič; Messick, David M. (1990). Contemporary Issues in Decision Making. North-Holland. p. 50. ISBN 978-0-444-88618-7.
  3. Frisch, Deborah; Baron, Jonathan (1988). “Ambiguity and rationality”. Journal of Behavioral Decision Making. 1 (3): 149–157. doi:1002/bdm.3960010303.