Ambiguity effect

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The ambiguity effect is a cognitive bias where decision making is affected by lack of information, or “ambiguity”. People tend to select options for which the probability of a favourable outcome is known, over an option for which the probability of a favourable outcome is unknown.


Examples:

People choosing a fixed rate mortgage when buying a house over a variable rate mortgage. Variable rates mortgages have statistically proven to save more money in the long run.

A risk-averse investor will tend to invest in “safe” investments such as bonds instead of stocks. The stock market, over a long period of time, will be more likely to provide a higher return, yet the investor will prefer the “safer” investment in which returns are known.


How it is exploited:

You are given a choice by an actor in which there is heavy investment in you picking one of them. You are explained the one choice in depth, while the other is made more vague and ill defined.

This is how new laws are passed, net neutrality and the usual hot topics. The choice others want us to make is almost made for us.

The choice that the invested actor doesn’t want you to make will be confusing and misunderstanding.

The media does this constantly, they are the biggest culprits.