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Hacking the mind by understanding biases—Ambiguity Effect

The human mind is an amazing machine. It is incredibly complicated and uses tricks and rules to help us make decisions quickly—but those rules can be hacked…

It’s helpful to understand the natural biases that you have so that you can be alert for others aiming to take advantage of you—or you can use some of the tricks to help people persuade others.

Let’s talk about the Ambiguity Effect.

When given an option people are more likely to avoid the options in which the probability feels unknown.

Examples of the Ambiguity Effect:

  • Most people would choose a regular paycheck over the unknown payoff of a business venture.
  • If a student is reading reviews of professors online, and they have the option between a known teacher that is ranked average and a teacher who is new to the school, and is without ranking—they will likely choose the known one.
  • If a board of directors is deciding whether to keep with the same strategy that is continuing to lose steam or take a chance on a new one—they’re likely to feel an urge to stick to what they’ve seen and understand.
  • Two cars are for sale. One of them has a Car Fax that’s okay—it shows a small accident, the other has none. A buyer is more likely to choose the one that’s known.

How to use this bias:

When asking someone or a group of people to take a new action, it’s important to give them handles that allow them to grab hold of your proposed action. Here are a few different type of handles that can help people overcome the ambiguity effect:

  • Metaphor—if you compare an unknown action with one that is well known, you’ll increase the comfort of someone making the choice. Example: “Owning a business is better than working for a paycheck—just like teaching a person to fish is better than giving them a fish.”
  • Statistics—if someone doesn’t understand an option, if you give them statistics, it can help. Example: “A bond pays a 4% return—our managed fund has returned over 7.5% each year for the last decade.”
  • Guarantee—if you’re asking someone to take a risk, you can show that you believe in the outcome so much that you’ll take on the risk for them. Example: “Take our bootcamp and get a $60,000 job or we’ll give you your tuition back.”