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

<p><span style="font-weight: 400;">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. </span></p> <p><span style="font-weight: 400;">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.</span></p> <p><span style="font-weight: 400;">Show Notes:</span></p> <ul> <li><span style="font-weight: 400;">[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.</span></li> <li><span style="font-weight: 400;">[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.</span></li> <li><span style="font-weight: 400;">[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.</span></li> <li><span style="font-weight: 400;">[05:30] As with everything, when you present information, how you talk about it matters more than what you are saying.</span> <strong>Frame</strong> <span style="font-weight: 400;">the information you present to highlight