The ambiguity effect influences our shopping habits. Research shows that people tend to choose products and services from well-known brands because they think that known brands have better quality products.
The buyer faces three potential consequences:
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Self-reflection can help you to see where you are on the spectrum of ambiguity. Think of a time when you had to decide with limited information. How did you address it? How did you feel while trying to make a choice? Which option did you choose?
If you have low levels of tolerance for ambiguity:
People have different tolerance levels for ambiguity - the tendency to view ambiguous circumstances as desirable.
Research shows that when we have to decide between two possible outcomes, one with a known probability and one with an unknown probability, we tend to choose the option with the known probability.
We skip over the difficult part of making estimates or guesses about the ambiguous option and opt instead for the familiar outcome.
What’s more important than how much data you have is how it frames the way you think.
Some leader when they're under pressure to appear decisive, approach complex situations with simple rules or analogies, selectively using data to justify poor judgment calls.
Research has shown that innovators and entrepreneurs don't take more risk than the average person. However, they are more comfortable making decisions in uncertainty.
They have a set of skills that allows them to navigate in uncertainty. These skills can be learned and practised by anyone to improve their innovation skills.
Most of us are quite addicted to a degree of certainty of all kinds, as this is what makes us feel safe. And now we all know nothing compares to feelings such as safety and control.
When faced with uncertainty, on the other hand, we tend to make irrational decisions, due to sheer fear.
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