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Ambiguity Aversion

By Ben Ambridge

29.06.2018

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I’d like you to imagine that you’re in the finale of a gameshow, and you have to pick a red ball out of a bag, blindfolded, to win the jackpot of a million pounds. But before you pick the ball, you have to choose which bag you want to pick the ball out of. One bag has a 50/50 mix of red balls and black balls. The other bag also has a mix of red and black balls, but you have no idea of the proportion. It could be all red balls. It could be all black balls. It could be 50/50, 70/30, it could be anything. Which would you pick?

This is a famous thought experiment in psychology called the Ellsberg Paradox, after Daniel Ellsberg, who’s actually a former military analyst for the US government. So, which did you pick? The 50/50 bag, right? It’s almost unheard of for people to pick the other bag, but really there’s no reason not to. Yeah, it might just contain one red ball. But it might contain a hundred red balls, giving you a certainty of winning the jackpot. But still nobody picks it. It’s a case of Better the Devil You Know (which if you’re as old as me, you might remember as a Kylie Minogue song back in 1990).

The lesson here is that people absolutely hate ambiguity or uncertainty, they hate not knowing what is going to happen; and any assurances you can give that they’re not going to be left hanging are going to help your conversions. For example, at Endless Gain we did some work recently for a site which told you that the delivery date would not be confirmed until after the payment page. This not only doesn’t avoid uncertainty- it actively promises it. And personally, I’ve in the past chosen one website over another when making an online purchase for the sole reason that the company I went for offers you a choice of delivery dates at no extra cost, rather than just saying in effect “we’ll deliver it when it suits us”.

And we’ve all experienced the frustration of sites that seem very reluctant to let you know whether or not the item is in stock before you’ve spent ages clicking right through to the payment page only to see: In stock: 0. Expected delivery: Unknown. What you want to be aiming for is the opposite of this. I’m kind of reluctant to bring up Amazon again, because I feel like I keep mentioning them, but they do so many things so well, and this is another one. I just looked for my own book on there (well, we all love Googling ourselves), and what does it say – in bold green letters, right under the title? Get it by Tomorrow and – just in case there’s any doubt – tomorrow’s date. No ambiguity, no uncertainty: Click “buy it now” and you will have this book in your hands on this date.

Another way this works is with brands. There was a recent study in a journal called Management Science which looked at how reluctant people were to choose small brands over more famous competitors. And essentially what they found is that almost everyone is extremely reluctant, and those that show a particular dislike of ambiguity –on tests like the one I gave you – particularly so. Remember the saying – better the devil you know. The famous brand doesn’t even have to be particularly liked. It could be a “devil”. For example, many of the big energy, broadband and phone companies – not to mention banks – have very low customer satisfaction scores, but does that mean you’d take a punt with one you’d never heard of. For most people – not a chance.

In short, people crave certainty and hate ambiguity. So, whether it’s in terms of the brands you offer, your delivery options or your stock-checking procedures, make sure you are giving people certainty, and that you don’t lose your conversion to ambiguity aversion.

Ben Ambridge
Hi, I’m Ben. I’m a Reader in Psychology at the University of Liverpool and I lead consumer psychology at Endless Gain. I’m interested in how research findings from academic psychology can be applied in our everyday lives as consumers. And, importantly how psychology plays an influential role in ecommerce. I write a weekly psychology column for The Observer, and my book Psy-Q: You Know Your IQ - Now Test Your Psychological Intelligence has been translated into 15 languages. Check out my TED talk, "Ten Myths about Psychology, Debunked".

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