This excerpt from Jonah Lehrer’s recent entry about Risk, Fear, and Certainty has me thinking today:
I think the financial crisis has helped expose a powerful bias in human decision-making, which is our abhorrence of uncertainty. We hate not knowing, and this often leads us to neglect relevant information that might undermine the certainty of our conclusions. I think some of the most compelling research on this topic has been done by Colin Camerer, who has played a simple game called the Ellsberg paradox with subjects in an fMRI machine. To make a long story short, Camerer showed that players in the uncertainty condition – they were given less information about the premise of the game – exhibited increased activity in the amygdala, a center of fear, anxiety and other aversive emotions. In other words, we filled in the gaps of our knowledge with fright. This leads us to find ways to minimize our uncertainty – we can’t stand such negative emotions – and so we start cherry-picking facts and forgetting to question our assumptions.
It is particularly relevant to me right now because I have just recently emerged from a highly uncertain state to a relatively bad, but certain state, regarding my bar and art gallery business, McLeod Residence. In particular, I was uncertain about how much debt I was going to be in, due to being tied to a long term lease in a building that I couldn’t run my business in. Yesterday, this situation came to a resolution and I now know exactly how much in debt I am, and even though it’s a big number, it’s a solid number, and won’t grow by $4,000+ every month.
So, yes, I can relate to the abhorrence of uncertainty. Not knowing, and feeling like things are a little out of your own control, is not enjoyable.
What I haven’t fully explored yet is just how much our abhorrence of uncertainty causes us to make mistakes of judgment. In other words, how much does the desire to avoid uncertainty cause us to avoid reality, and make decisions based on fiction, hopes, dreams, positive thinking, etc.
I love Wikipedia’s list of cognitive biases, and return to it frequently over the last couple years when trying to think about how my own decision making process is affected by my biases. How many of them are related to the desire to avoid the uncertain:
Base rate fallacy — ignoring available statistical data in favor of particulars.
Expectation bias — the tendency for experimenters to believe, certify, and publish data that agrees with their expectations for the outcome of an experiment, and to disbelieve, discard, or downgrade the corresponding weightings for data that appears to conflict with those expectations.
Mere exposure effect — the tendency for people to express undue liking for things merely because they are familiar with them.
Pseudocertainty effect — the tendency to make risk-averse choices if the expected outcome is positive, but make risk-seeking choices to avoid negative outcomes.
Status quo bias — the tendency for people to like things to stay relatively the same.
Ambiguity effect — the avoidance of options for which missing information makes the probability seem “unknown”.
And perhaps the most relevant:
Ostrich effect — ignoring an obvious (negative) situation.
The reason I like studying cognitive biases is that by studying them, and becoming more aware of our own biases (and the biases that we are pretty much all influenced by), we avoid the most meta of all biases:
Bias blind spot — the tendency not to compensate for one’s own cognitive biases.