How do you reach to missing, or lack of information in you decision making process? Before you read further in this article, please take a few seconds to make up your mind of how you yourself think you would react and make decisions, if you were missing information to make the decision. See later on if you recognise yourself in what is written, and compare that with you original thought of how you thought you would react.The interesting fact is that we tend to select decisions where the possible outcome of what we favour is known, rather than decisions on options where the probability of the outcome is unknown.Does that make sense? Or should I explain why this is a cognitive bias, and how this applies to your decision making process in your business? Read further and I will.

If we look at how most people invest as an example. Lets se this from various perspectives of how average people save or «invest». Someone who can be considered risk averse tend to put their money into «safe» investments such as government bonds or placing the money on their bank account etc.. The money can’t disappear there right? Even they lose value, but that a different story. They place their investments in these «safe» returns, rater then other more risky, but profitable investments such as stocks and funds. Why is this? Even the stock market carries the potential to give significantly more return over time.The reason for this is that the preferred outcome is known. We know that the chances are great that you will get interest rates, and some returns on you investments by placing them in «safe» investments. We know that outcome as a certainty. Even we know that stocks and funds give a greater return over time, this is a uncertain outcome. And placing money on the bank or in government bonds, everyone knows that the profit get eaten by inflation. But we as humans think in the way that: «Better a devil you know then one you don’t»

We are therefore more likely to invest our time and money, in a safe outcome we already know the outcome of. Rather than an outcome we dont know. Even we know the result has a greater chance of better return to choose otherwise. So naturally you avoid doing things, or make choices you know less about. In other words, when you have lack of information.

The result is avoidance to try new things, and a limited ability to recognise long- term benefits of riskier decisions compared to smaller gains from «safer» choices, due to lack of information connected to it.The ambiguity effect is often fear driven. Something i am sure you recognise yourself in, we all experience this effect to some degree. We have a strange ability to fill in the knowledge gaps with fear. You might recognise yourself in that if you think back at various events in your life, or current experiences. We sometimes fill the gaps of knowledge, incomplete or unclear information with the worst possible scenarios we can imagine. And usually the truth is far less frightening. I am sure you recognise yourself in this to some degree.As mentioned before , we often use heuristics or schemas to sort information. This often lead us to seek out the missing pieces of information. Often, information that can not be found. You experience this effect when you can not find that part of information. And this is a totally natural process we are programmed to experience.

So how does this apply to business?

I am sure you already have some cases you have thought trough that have made this bias affect you somehow. Maybe GDPR, the biggest hyped up thing for most businesses in 2018 is a good example. Most people feel their heart hit double, just by seeing a advertisement about it. So as an example, many cyber security and other related companies have taken good use of this effect for what it is worth. Manipulation on lack of knowledge, by filling in the gaps of information. Getting sales on mainly using peoples bias of fear, making sure to “inform”. So that people are manipulated to go for the known outcome of behaviour. Innovation:We see many companies being forced to restructure, all from their business model, internal structure, employee structure and sometimes even their whole product. The world is changing, big changes creates many big «what if» effects. Being aware of various effect this have for you and your workforce is important.Leadership and workplace effects:Feedback is important for a variety of reasons. But on feedback on work done by people in a team or workplace. This effect has important factors. If you are buzzy, it may be tempting to not give any attention to give feedback, it is delivered after all, right? Job done! Giving feedback on tasks done is important in a workplace setting. Leaving employees «hanging» with the gap in knowledge if the work they did is good enough, can cause ambiguity bias effects in employees. It is a lot of gaps to fill with uncertainty for employees who dont get feedback. Causing problems further down the line.Marketing:This effect should for sure be considered by you guys doing marketing strategies. If a potential buyer know less about your company then they do of your competitors company. They are cognitively biased, more likely to go to your competitor. For the simple reason that they will feel more informed, and will be less effected by this bias. So when putting together your marketing strategy, remember to have focus on information, to ensure that you will not get victim of this bias effect in your clients or consumers.Startups:I am sure some of you startup people can relate to this bias, startups are risky. Many things can go wrong, and you actually have no, or little information of how the outcome will be. If so, you are in risk of this cognitive bias effect.Investments:As already stated above as an example, I am sure you will re- consider how you evaluate risk. If you recognised yourself, maybe you will also do decisions otherwise in the future. 

How to fight the ambiguity effect at your workplace?

An advise to bring further is to fill the knowledge gaps, in yourself and others. What do I mean by that? You are now aware of this cognitive effect, that in itself is enough knowledge to be able to be more resistant. So the best tool to fight this is communication, if you are uncertain of something. Ask! If you yourself have supervisors, ask for feedback or clarification when you come across this effect.If you are a leader, make the direction clear, give feedback and ask if your team have any questions. Or need any further help from you. Give information about changes, provide details, fill in the gaps of the people in your team. It may seem unnecessary, but having this relation to people can be one of the cores to generate trust as a leader.

Tim Hoiseth

Tim has background as is business psychologist and work sociologist with expertise in building organisations and teams to solve problems for the future. Tim has expertise in technology and the symbiosis between human interaction and technology in operational processes.