The Ambiguity Effect |
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What is it?
A bias in decision-making that is affected by a lack of information. When people are making decisions and there is an unknown in the equation, they tend to bank on the probability of the known factors and avoid the unknown.
How to spot it:
Are you avoiding options just because information appears to be missing? It's classic “fear of the unknown” type of stuff.
Where might you see it occur in real life?
Here are three, fairly common examples:
Why is it important?
Eliminating ambiguity is crucial when it comes to any form of communication. If it appears as if information is missing, humans have a natural tendency to either avoid making a decision, or go with the clearer option.
This also impacts people’s willingness to try new things, or try things that appear untested – whether they are new products and services, or new processes and attitudes towards the workplace.
What is the impact in business?
Ambiguity kills deals.
When presenting a new product, service or idea to someone, be aware of how damaging ambiguity can be, especially if there is a status quo. So if they already have a working solution in place, your new and untested product is going to be daunting to them, unless you can transform the unknown and untested into the familiar and proven for them.
Go through your pitch, presentation or notes beforehand and ask yourself “is there information missing from my argument? Is there anything I’m not telling them?” In reality, there is always going to be – you can’t cover everything. But go through what you know you have left out and ask yourself “have I left it out because it isn’t relevant to the decision, or have I left it out because I don’t like it?”
If it’s the former, put yourself in the shoes of the person you are presenting to – is it still irrelevant, are you sure they don’t need to know it? If it’s the latter, think about how you can mitigate that risk (or if you are really ready to pitch this idea).
Finally, think about what you’re pitching – there will always be uncertainty and risk involved with taking on something new whether it be an idea, product or service, but what can you do to reduce that uncertainty? Can you add credibility in some way, or demonstrate success in a related situation? Your aim here is to clearly demonstrate that the unknown (in this case, going with your idea) is not something scary that should be avoided, and it is worth moving slightly out of their comfort zone to try.
There are ways that you can do achieve this. Compare the “unknown” to a situation that is “known” and successful. Alternatively, reduce the risk as much as possible by transferring it to yourself or your organisation - this is where “free trial periods” or a “money back guarantee” can be particularly powerful.
A bias in decision-making that is affected by a lack of information. When people are making decisions and there is an unknown in the equation, they tend to bank on the probability of the known factors and avoid the unknown.
How to spot it:
Are you avoiding options just because information appears to be missing? It's classic “fear of the unknown” type of stuff.
Where might you see it occur in real life?
Here are three, fairly common examples:
- Fixed rate mortgages, a known entity, are often more popular than variable rate mortgages even when the variable rate is more likely to save you money over time.
- Most people would prefer a fixed, regular salary as opposed to the unknown payoff of a business venture.
- If you are making a purchase on Amazon and want to choose between two products - one of which has an average rating and the other has no rating, most people choose the former.
Why is it important?
Eliminating ambiguity is crucial when it comes to any form of communication. If it appears as if information is missing, humans have a natural tendency to either avoid making a decision, or go with the clearer option.
This also impacts people’s willingness to try new things, or try things that appear untested – whether they are new products and services, or new processes and attitudes towards the workplace.
What is the impact in business?
Ambiguity kills deals.
When presenting a new product, service or idea to someone, be aware of how damaging ambiguity can be, especially if there is a status quo. So if they already have a working solution in place, your new and untested product is going to be daunting to them, unless you can transform the unknown and untested into the familiar and proven for them.
Go through your pitch, presentation or notes beforehand and ask yourself “is there information missing from my argument? Is there anything I’m not telling them?” In reality, there is always going to be – you can’t cover everything. But go through what you know you have left out and ask yourself “have I left it out because it isn’t relevant to the decision, or have I left it out because I don’t like it?”
If it’s the former, put yourself in the shoes of the person you are presenting to – is it still irrelevant, are you sure they don’t need to know it? If it’s the latter, think about how you can mitigate that risk (or if you are really ready to pitch this idea).
Finally, think about what you’re pitching – there will always be uncertainty and risk involved with taking on something new whether it be an idea, product or service, but what can you do to reduce that uncertainty? Can you add credibility in some way, or demonstrate success in a related situation? Your aim here is to clearly demonstrate that the unknown (in this case, going with your idea) is not something scary that should be avoided, and it is worth moving slightly out of their comfort zone to try.
There are ways that you can do achieve this. Compare the “unknown” to a situation that is “known” and successful. Alternatively, reduce the risk as much as possible by transferring it to yourself or your organisation - this is where “free trial periods” or a “money back guarantee” can be particularly powerful.