Today is all about the aversion that humans have to uncertainty and ambiguity, our fear of the unknown, and how it can cause us to choose something we are familiar with even though it may not be in our best interest. While this can often align with risk aversion, they are not the same thing, and while they do often correlate, they don’t have to.

More on that, and of course, loss aversion and inequity aversion – all the aversions – on the show today, but because this is a concept I’m guessing you’ll “get” pretty easily, there is less on the research studies (they are linked in the notes). That leaves the bulk of the episode to focus on how this applies to you in two aspects of business: internal communication and customer experience. Ready? Let’s get started.

Show Notes:

[00:43] Today is about the aversion that humans have to uncertainty and ambiguity, our fear of the unknown, and how it can cause us to choose something we are familiar with even though it may not be in our best interest.
[02:38] The most important thing to know is that we don’t like the unknown. We don’t like uncertainty in our choices and will prefer known risks over unknown risks. And also, because our brains are lazy and rely on rules of thumb, we often will avoid making complex (and not so complex) calculations.
[03:39] Consider the stock market. This can have unknown risks and so people can feel hesitant to put their money there even when the probabilities and rates of return are relatively known over time.
[05:30] As with everything, when you present information, how you talk about it matters more than what you are saying. Frame the information you present to highlight what IS known to make it easier for someone to see the positive. (Note: don’t gloss over important risks or problems. Use good judgment.)
[07:47] When you are presenting a change at work, there are so so so many variables at play, and if you leave a lot of uncertainty and ambiguity – say you share too early or in an incomplete way – there is a good chance people will rebel against that unknown future state.
[09:17] A real problem that happens a lot (and is unfathomably detrimental to change initiatives at work), is when someone is given ambiguous information and they feel the need to get their own brain relief by reducing their own mental burden (and wanting someone to help fill that void) in a way that they will find any possible way to justify telling someone (or in some cases, many someones) to cover up that uncertainty.
[11:26] As George Lowenstein proposed, “Curiosity is like an itch on the brain and we need anything we can find to scratch that itch.” When there is information to be found, we can fill the gap with learning. When there isn’t like in these scenarios, it can be gossip, fear, and doomsday-style planning for the worst, which will cause people to rebel against the potential future before it even has a chance to bloom.
[12:55] Everyone on your team needs to be trained on how to share the information and when, and make sure the message is properly framed with regard to all the ambiguous pieces that could cause people to revert to the known instead of the unknown.
[14:19] Melina shares some questions you can ask yourself to help determine when it is the right time to share information.
[15:38] Just forcing yourself to take a step back and a calming breath as you consider what is really happening can be so helpful. You may want to get out and take a walk or sleep on it or whatever else you do to gain perspective.
[18:35] Sharing too much information can cause overwhelm as well, which is stressful and creates its own avoidance, so it is about sharing the right information in the right way at the right time to the right people. Remember that “fair” isn’t always equal, and different people need to hear different information at different times.
[19:50] The early days of Covid are such a perfect case study for what happens when we feel uncertainty and a lack of control. When people feel a lack of control and like they can’t do anything to protect themselves or their families, they may strive to find control in other areas – like hoarding toilet paper. It feels like you are doing something, and can reduce some of that stress.
[21:59] Time moves differently on the two sides of a decision in ambiguous times. This presents a big communication problem and disconnect that teams need to pay attention to if they want to be effective.
[22:51] The “no update update” can be really helpful for companies. I know you want to wait until everything is perfect to share, but that rumor mill is going to be piling up in a way that is working against you and you owe it to your employees to help relieve some of that stress.
[25:30] “No update updates” can be really helpful to diffuse some pressure when there is a lot going on and things are scary on the other side of the decision, but you can’t do too many “no update updates” in a row without it starting to be a new problem…
[28:06] Let’s look at the customer experience side. We like to think people want a lot of choices and to be treated as individuals with very unique experiences. While that can be true, there is also a real issue with the ambiguity side of things if we allow ourselves to rest on the easy answer of “it’s custom.”
[29:56] When people feel uncertain, they are more likely to look to what others like them do in this situation, so testimonials, social proof, and case studies are all your friends in fighting ambiguity aversion. You don’t want or need to share all the nuts and bolts, but at least let them know that there is a process.
[32:02] You owe it to your clients and customers to take the time to make this as easy and streamlined as possible – and the benefit is it will make it easier for people to choose you and do business with you.
[32:29] Melina’s closing thoughts
[35:02] Adapting your lenses and looking from multiple angles and depths is really important to make that possible, which is why an episode like this is so valuable.

Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show.

I hope you love everything recommended via The Brainy Business! Everything was independently reviewed and selected by me, Melina Palmer. So you know, as an Amazon Associate I earn from qualifying purchases. That means if you decide to shop from the links on this page (via Amazon or others), The Brainy Business may collect a share of sales or other compensation.

Let’s connect:

Melina@TheBrainyBusiness.com
The Brainy Business® on Facebook
The Brainy Business on Twitter
The Brainy Business on Instagram
The Brainy Business on LinkedIn
Melina on LinkedIn
The Brainy Business on Youtube
Join the BE Thoughtful Revolution – our free behavioral economics community, and keep the conversation going!

Learn and Support The Brainy Business:

Check out and get your copies of Melina’s Books.

Get the Books Mentioned on (or related to) this Episode:

What Your Employees Need and Can’t Tell You, by Melina Palmer
The Paradox of Choice, by Barry Schwartz
Sludge, by Cass Sunstein
Nudge, by Richard Thaler & Cass Sunstein
Friction, by Roger Dooley

Top Recommended Next Episode: Inequity Aversion: That’s Not Fair! (episode 224)

Already Heard That One? Try These:

Availability Bias (ep 15 )
Familiarity Bias (ep 149)
Status Quo Bias (ep 142)
Loss Aversion (ep 9)
Framing (ep 16)
Bikeshedding (ep 99)
Planning Fallacy (ep 114)
Paradox of Choice: Why More is Less (ep 171)
Sludge: What It Is and How to Reduce It (ep 179)
NUDGES & Choice Architecture (ep 35)

Other Important Links:

Brainy Bites - Melina’s LinkedIn Newsletter
RISK, AMBIGUITY, AND THE SAVAGE AXIOMS
The Itch of Curiosity
Ambiguity (uncertainty) aversion
Treatment decisions under ambiguity

243. Is “The Devil You Know” Really Better? Ambiguity / Uncertainty Aversion

The Brainy Business | Understanding the Psychology of Why People Buy | Behavioral Economics