Ambiguity Bias
Unfortunately, our brain craves certainty. It desperately seeks out the sure-fire win, even if it means we win less often. We choose the low-return investment because it has a guaranteed interest rate. We pick the guaranteed return policy at Nordstrom, even though we know we’ll pay more.
The Ambiguity Effect continually tempts us to accept the mediocre rewards of a play-it-safe strategy. So when a risk has a high likelihood of paying off, why is our brain still such a coward?
It’s important to remember that evolution didn’t optimize our brains to deal with the risks of modern life. Our brains were slowly crafted over millions of years. Evolution optimized our brains to navigate the basic survival challenges faced by our hunter-gatherer ancestors.
Life in the forest was filled with big life-threatening risks: starving to death, dying of exposure, and big-toothed predators. During these ancient times, taking a risk and coming up a loser wasn’t just inconvenient, it oftentimes was fatal.
Seeking certainty and minimizing risk was a very smart survival strategy back then.
But now, most of the life-threatening risks of ancient times are gone, but our out-of-date brains have yet to catch on. Snakes, tainted water, and heights are still top fears, yet few people die from these anymore. Now, if we break our leg, we can go to a hospital. Our lives are filled with risk mitigators like insurance, credit cards, police, and social services.
Unfortunately, our brain’s instinctual fear centers are still optimized for those big scary dangers of the African savannah. This is why we continually fall for the Ambiguity Effect.
So next time you’re evaluating a risk, remember that your caveman brain is hardwired to misjudge that risk. Now’s the time to fully engage your rational brain. Ask yourself, “Can I really afford to fail?” Most of the time, the answer is a firm yes.
Sure, we may experience frustration, lost time, hurt feelings and lost money, but odds are, we can bandage our wounded pride, learn a few things, and move forward without permanent damage.
Remember, a large dose of well-managed risk is a must if we hope to bring meaningful change to our lives.