Speaker 1: Welcome to Stuff to Blow Your Mind, the production of iHeartRadio.
Speaker 2: Hey you welcome to Stuff to Blow your Mind. My
Speaker 2: name is Robert.
Speaker 3: Lamb and I am Joe McCormick, and we're back with
Speaker 3: part two in our series called The Devil You Know,
Speaker 3: which is about ambiguity aversion. That's the observation that we
Speaker 3: prefer risks with known probabilities over risks with unknown probabilities,
Speaker 3: even if you have no reason for thinking that the
Speaker 3: unknown risks will be worse. This preference is captured by
Speaker 3: the folk saying, better the devil you know than the
Speaker 3: devil you don't. For the most part, people don't like
Speaker 3: taking bets when they don't know what the odds are,
Speaker 3: and will pay up just to avoid having to deal
Speaker 3: with ambiguity. And this is funny in a way because
Speaker 3: almost all of the decisions that we make in our
Speaker 3: actual lives are made with incomplete knowledge and some significant
Speaker 3: amount of uncertainty about our likelihood of success. Very few
Speaker 3: things in reality have clear objective odds, like a fair
Speaker 3: coin flip or a dice roll. However, it's pretty well
Speaker 3: established that most people, most of the time, do not
Speaker 3: like making decisions under ambiguous conditions, and we will go
Speaker 3: to great lengths to avoid taking risks with unknown probabilities.
Speaker 3: So in the last episode, after we introduced the concept,
Speaker 3: we talked a good bit about the original piece of
Speaker 3: writing that made ambiguity aversion famous. This was a nineteen
Speaker 3: sixty one paper by the American economist, anti war activist,
Speaker 3: and whistleblower Daniel Ellsberg. The paper was called Risk Ambiguity
Speaker 3: and the Savage Axioms, published in the Quarterly Journal of Economics,
Speaker 3: and to briefly recap, this paper proposed the concept of
Speaker 3: ambiguity aversion using a number of thought experiments where you
Speaker 3: could take different bets based on like which color ball
Speaker 3: you would draw by chance out of an urn. Elsberg's
Speaker 3: point was that people would tend to prefer bets with
Speaker 3: clear odds of winning, say a one in three chance,
Speaker 3: over bets with unknown odds, where you could have anywhere
Speaker 3: between a zero percent chance or a two out of
Speaker 3: three chance. Elsberg's intuition here has been broadly supported by
Speaker 3: real world experiments. There are a few exceptions, but most
Speaker 3: of the time most people would rather take bets with
Speaker 3: clear odds, even in ways that end up implying self
Speaker 3: contradictory assumptions about the unknown odds. This was an important
Speaker 3: discovery in the economic field known as decision theory because
Speaker 3: it violated a framework known as Savage's axioms, which were
Speaker 3: widely used to model how people make decisions in situations
Speaker 3: of uncertainty or ambiguity, and this self contradictory behavior is
Speaker 3: now known as the Ellsberg paradox. And then, finally, in
Speaker 3: the last episode, after talking about the theoretical origins of
Speaker 3: ambiguity aversion, we also talked about this phenomenon in practice
Speaker 3: in the real world, and our main example here was
Speaker 3: the negotiation strategy famously associated with the Nixon White House
Speaker 3: known as madman theory, a strategy where you intentionally cultivate
Speaker 3: a reputation for volatility and unpredictability. In essence, you make
Speaker 3: your peers and your counterparties worry that you are a
Speaker 3: madman who is capable of anything, and the idea here
Speaker 3: we ended up talking about a lot of reasons for
Speaker 3: thinking that this is actually not a good strategy, but
Speaker 3: the idea here is that you will exploit their natural
Speaker 3: ambiguity aversion to get them to make concessions that they
Speaker 3: would not make otherwise, And then we did get into
Speaker 3: some international relations research on Madman theory, like reasons why
Speaker 3: it might not actually be a good strategy, especially for
Speaker 3: achieving long term goals. In fact, I think in the
Speaker 3: long term most experts seem to agree that it is
Speaker 3: harmful to everyone involved, including the practitioner. But again, the
Speaker 3: reason it may sometimes work for achieving short term wins
Speaker 3: is by taking advantage of this fear people have of ambiguity,
Speaker 3: the fact that a lot of people would rather just
Speaker 3: take a bad deal than keep negotiating with somebody who
Speaker 3: is highly unpredictable.
Speaker 2: You know, I was thinking after our recording that another
Speaker 2: often cited bit of supposed wisdom along these lines is
Speaker 2: the idea in generally you'll see this reference out of context,
Speaker 2: so someone will not be talking about actually going to prison.
Speaker 2: They'll be talking about your first dai of new school
Speaker 2: or something, and they'll jokingly say, well, you know what
Speaker 2: you're supposed to do. You're supposed to go up to
Speaker 2: the biggest person around and hit them with a steel chair,
Speaker 2: And then everyone will be like, WHOA, that guy's crazy.
Speaker 2: We better not mess with him. It seems to follow
Speaker 2: similar logic, and also seem equally, if not more flawed
Speaker 2: in its approach. It does not sound like a tactic
Speaker 2: that would actually generate like, you know, long term benefits.
Speaker 3: It's one of those pieces of advice that is probably
Speaker 3: more often repeated because it's like memorable and funny and
Speaker 3: makes for a good story because that many people would
Speaker 3: think it's actually good advice, especially if you have relevant experience.
Speaker 2: I don't know.
Speaker 3: I mean, I don't know a lot about like prison strategy,
Speaker 3: but that does seem like you could have some real downsides.
Speaker 2: You know, it makes me think of that the you know,
Speaker 2: the the this sense another bit of wisdom, another nugget
Speaker 2: that's Offen dished out, and that is getting into the
Speaker 2: philosophy of Nietzsche. Uh, you know that which doesn't kill
Speaker 2: us makes us stronger. But I forget who it was
Speaker 2: who did a spin on this and said, well that
Speaker 2: that which doesn't kill us nearly kills us, and that
Speaker 2: should be a reason to give us pause.
Speaker 3: That's funny because that Nietzsche saying is also when I
Speaker 3: know this has come up on the show before, I
Speaker 3: know that like in huge number of cases that's not true. Yeah,
Speaker 3: like sometimes it makes us stronger, like we do sometimes learn,
Speaker 3: learn and grow and gain strength from adversity, but that's
Speaker 3: like some subset of adversities. A lot of adversities leave
Speaker 3: us much weaker and deeply shaken.
Speaker 2: Yeah, shaken, or less trusting or just yeah, or just
Speaker 2: completely weakened. And I know this may weaken us. We
Speaker 2: survive it, but it's weakened our system and then we're
Speaker 2: more susceptible to the next thing and so forth. So yeah,
Speaker 2: I mean, it's great to take solace in some of
Speaker 2: these sayings, but you can only take them so far, really, So.
Speaker 3: Anyway, we're back today to talk about some more angles
Speaker 3: on ambiguity aversion, and one of the first things I
Speaker 3: want to get into is that in the last episode
Speaker 3: we did talk a bit about the distinction that Daniel
Speaker 3: Elsberg tried to make between ambiguity and risk. But I
Speaker 3: think one thing that's really important to point out that
Speaker 3: we didn't get into last time is the distinction between
Speaker 3: ambiguity aversion and risk aversion. I think risk aversion is
Speaker 3: a concept more people are probably familiar with, you know,
Speaker 3: that comes up in conversation. Sometimes these are not the
Speaker 3: same thing. One who is risk averse doesn't like to
Speaker 3: make bets. They would prefer a sure thing, even if
Speaker 3: the sure thing is statistically less valuable than the risk. So,
Speaker 3: for example, imagine a fair coin flip game. We stipulate
Speaker 3: that this is a fair coin. There's no cheating involved,
Speaker 3: and on each round when I flip the coin, I
Speaker 3: can either just give you forty dollars no matter how
Speaker 3: the coin lands, or I could give you one hundred
Speaker 3: dollars every time it lands heads and nothing every time
Speaker 3: it lands tails.
Speaker 2: So with the.
Speaker 3: Gambling condition here, you will on average win fifty dollars
Speaker 3: per round. It's a fifty to fifty chance of winning,
Speaker 3: and the payout is one hundred dollars. So the odds
Speaker 3: here are clear. If you play this game a thousand
Speaker 3: times in a row, you will make more money by
Speaker 3: gambling than by taking the guaranteed forty dollars every time.
Speaker 3: It's statistically all but a sure thing. But still some
Speaker 3: people would rather just take the actual sure thing. They
Speaker 3: would rather just take the forty dollars, and that is
Speaker 3: risk aversion. It is a psychological tendency to dislike and
Speaker 3: avoid taking a stake in uncertain outcomes, even if you
Speaker 3: know the exact odds of those outcomes and potentially even
Speaker 3: if those odds will statistically bring you more benefit than
Speaker 3: the sure thing. And another way of thinking about risk
Speaker 3: aversion is that sometimes to some people, the feeling of
Speaker 3: security that you get from taking the sure thing is
Speaker 3: actually more valuable than the money. It's more valuable than
Speaker 3: the extra money that you would take home on average
Speaker 3: by placing a bet with a higher expected value. And
Speaker 3: this emphasizes something that is true in decision theory and economics.
Speaker 3: Value isn't just about getting or keeping money. We use
Speaker 3: money because it's an easy way to quantify value and experiments.
Speaker 3: But sometimes we would pay money just to feel certainty
Speaker 3: and comfort. That feeling is of higher value to us
Speaker 3: than the money is. But then, of course again, other
Speaker 3: people at other times would not pay that. Some people
Speaker 3: love the feeling of risk. I mean people gamble for pleasure.
Speaker 2: Yeah, absolutely, but yeah, but other times it's like I
Speaker 2: just don't want to take a chance on this. I'd
Speaker 2: rather just go for what's going to be straightforward and guarantee, right.
Speaker 3: So that's risk and risk aversion. Ambiguity a version is
Speaker 3: different from risk aversion because it is not about a
Speaker 3: dislike of risk, but specifically a desire to avoid ambiguous
Speaker 3: risks with unclear odds. You might love gambling on a
Speaker 3: fifty to fifty coin toss, but you might not want
Speaker 3: to play the game where you have to guess how
Speaker 3: many black balls or yellow balls there are and there's
Speaker 3: no way to know. So a person could technically be
Speaker 3: not very risk averse at all, but highly averse to
Speaker 3: ambiguity the interaction. The more I thought about it, the
Speaker 3: more I thought that the interaction between these two tendencies
Speaker 3: in real life is interesting because I think to many
Speaker 3: of us, it's not always if a fear or a
Speaker 3: hesitancy we're experiencing about making a decision is rooted in
Speaker 3: risk aversion or ambiguity aversion. For instance, this came up
Speaker 3: because I was trying to think of examples of risk aversion,
Speaker 3: and I thought of the idea of what to do
Speaker 3: with savings. Imagine you save up a little bit of
Speaker 3: extra money at work from your paycheck, and you want
Speaker 3: to put that toward retirement, and you have multiple options
Speaker 3: of what to do with that money. Imagine a person's
Speaker 3: in that scenario and they discover that they would really
Speaker 3: feel better just keeping the money in a bank account,
Speaker 3: earning a relatively low rate of interest, rather than investing
Speaker 3: it in like a stock market index fund, where with
Speaker 3: the index fund, it is commonly assumed it is standard
Speaker 3: financial wisdom that the balance will grow at a faster
Speaker 3: rate than it will just sitting in a savings account,
Speaker 3: and you will end up with more money years down
Speaker 3: the road if you put it in the index fund.
Speaker 3: This pattern of behavior could be taken as an example
Speaker 3: of risk aversion, because it's like, I would choose to
Speaker 3: probably end up with less money just so I can
Speaker 3: avoid taking risks with what I have. But then I thought, well, no,
Speaker 3: not necessarily. What if that same impulse is actually a
Speaker 3: better example of ambiguity a version than risk aversion, Because
Speaker 3: how do we actually know that a stock market index
Speaker 3: fund will grow more over time than the balance of
Speaker 3: a savings account. The answer is historical patterns. It's like
Speaker 3: statistically true over the last one hundred years or so,
Speaker 3: you know, within certain economies in living memory. But it's
Speaker 3: not actually like a fixed odds casino game or a
Speaker 3: lab experiment where the odds of winning are fair axiomatically
Speaker 3: in the real world. As the fine print always says,
Speaker 3: investing involves risk, including loss of principle, and past performance
Speaker 3: does not guarantee future returns. So maybe actually preferring the
Speaker 3: savings account is a form of ambiguity aversion rather than
Speaker 3: risk aversion, responding to the idea that, well, what are
Speaker 3: the odds that suddenly, somehow investing in the stock market
Speaker 3: becomes a bad idea in a way that it has
Speaker 3: not within living memory. It's hard to understand what the
Speaker 3: odds of something like that are. Seems pretty unlikely, but
Speaker 3: it's fundamentally ambiguous. You just can't say what the objective
Speaker 3: odds are. There's really no way to calculate them. So
Speaker 3: sometimes there's actually ambiguity about whether there is ambiguity, you know,
Speaker 3: because like I think an invest an investment advisor might
Speaker 3: tell you on one hand, like, well, you know, historical
Speaker 3: performance of the stock market, you can pretty much depend
Speaker 3: on that that's a known risk when you know you
Speaker 3: have you have statistics that tell you that you'll most
Speaker 3: likely get this rate of return on average, and you
Speaker 3: just don't know how seriously to take the possibility that
Speaker 3: the future will not be like the past.
Speaker 2: Yeah. Absolutely, And another angle that I was looking at
Speaker 2: here on all this is that it's not just the
Speaker 2: ambiguity and risk, but it's perceptions of ambiguity and risk.
Speaker 2: So you know, it ultimately isn't necessarily coming down as
Speaker 2: much to like what are actually the hard probabilities here.
Speaker 2: It can skew greatly depending on what a particular individual's
Speaker 2: worldview is. So you could have somebody like you could
Speaker 2: have like a you know, a Washington Bartholomew hog Wallop figure,
Speaker 2: and he's decided not only is he not going to
Speaker 2: invest in the stock market, he's not even gonna put
Speaker 2: his money in the bank. It's better off in the
Speaker 2: tin can buried in his backyard.
Speaker 3: Yeah, there you go.
Speaker 2: Yeah, even though there may be very good statistics that
Speaker 2: show that is less safe. Yeah, and that is a
Speaker 2: greater risk. Your worldview and perception could be Oh no, absolutely,
Speaker 2: you can't trust the banks at all. I can only
Speaker 2: trust myself, and therefore it's safer in my yard with
Speaker 2: me standing over it with a shotgun.
Speaker 3: But anyway, so this all brings us back to this
Speaker 3: distinction between risk aversion and ambiguity aversion, and how difficult
Speaker 3: it can be to tell the difference between the two,
Speaker 3: Like when we feel aversion to making a bet of
Speaker 3: some kind, which by way of analogy. That doesn't have
Speaker 3: to mean literally a bet with money, but just any
Speaker 3: important decision in our lives when we feel that, like fear, hesitancy,
Speaker 3: or resistance. We often think of this as risk aversion,
Speaker 3: but could it actually be more often ambiguity aversion That
Speaker 3: we're responding subconsciously to the fact that we don't know
Speaker 3: how to calculate the odds for the decision we're about
Speaker 3: to make, and that makes us uncomfortable. Now, one of
Speaker 3: the big things we left open after we introduce the
Speaker 3: concept of ambiguity a version in the last episode is
Speaker 3: how is decision theory supposed to make sense of this
Speaker 3: finding of like the Elsberg paradox? And there has been
Speaker 3: a great amount of inks billed in answering this question
Speaker 3: in the fifty something years since Elsberg. I don't think
Speaker 3: I can even attempt to cover the whole landscape of
Speaker 3: responses here, so I want to be clear this will
Speaker 3: not be a comprehensive technical survey of the ambiguity of
Speaker 3: version literature. I'm just going to mention a couple of
Speaker 3: broad trends and then a few ideas within each. So
Speaker 3: within the responses there are two main categories of thought.
Speaker 3: One assumes that ambiguity aversion is actually a component of
Speaker 3: rational decision making, that it is, in a subjective sense
Speaker 3: wise to avoid ambiguity even when you can't really prove
Speaker 3: that the ambiguous bets will generally turn out bad. The
Speaker 3: other main way of thinking is that ambiguity a version
Speaker 3: is some type of error or cognitive bias. And here
Speaker 3: I'm going to mention a couple of sources. The first
Speaker 3: one I cited in our last episode. That is a
Speaker 3: book chapter by Mark J. Maschina and Marciano Siniscalci called
Speaker 3: Ambiguity and Ambiguity of Version in the Handbook of Economics
Speaker 3: of Risk and Uncertainty published in twenty fourteen. And then
Speaker 3: the second source I want to mention here is by
Speaker 3: Nabil I al Najar and Jonathan Weinstein published in the
Speaker 3: Journal of Economics and Philosophy called the Ambiguity of Version
Speaker 3: Literature a Critical Assessment. This one is more in that
Speaker 3: second category I mentioned. It's an approach arguing that ambiguity
Speaker 3: of version is actually just a type of error basically.
Speaker 3: So first I want to look at what are some
Speaker 3: of the ways that ambiguity aversion and like the Elsberg
Speaker 3: paradox might actually be a form of rational, self consistent
Speaker 3: decision making. One theory here can be called the multiple
Speaker 3: priors model, also known as max men expected utility max
Speaker 3: men is max n max men expected utility or MEU.
Speaker 3: Let's think about it like this. Imagine you are asked
Speaker 3: to make a bet involving ambiguous odds, like we'll go
Speaker 3: back to the balls in the urn example from the
Speaker 3: first episode. So am I more likely to pull a
Speaker 3: red ball or a black ball out of this urn?
Speaker 3: And so to remember the details there? The three color
Speaker 3: eurn experiment was that inside this urn you can't see inside,
Speaker 3: you don't know what color you're reaching into grab, but
Speaker 3: there are exactly thirty red balls and then sixty balls
Speaker 3: that could be any mix of yellow and black. So
Speaker 3: they could be zero yellow and sixty black, sixty yellow
Speaker 3: and zero black, thirty and thirty, or anything in between.
Speaker 3: You have no way of knowing the mix in advance.
Speaker 3: In these situations, maximin expected utility theory would say that
Speaker 3: instead of forming one consistent belief about the number of
Speaker 3: black balls inside and then placing bets according to that prediction,
Speaker 3: we allow ourselves to consider multiple different probabilities and we
Speaker 3: apply those probabilities to different bets pessimistically. So essentially, for
Speaker 3: each new bet that requires us to guess the number
Speaker 3: of black balls, we ask ourselves what would be the
Speaker 3: worst case scenario for me here, and then we assume
Speaker 3: those worst case odds when considering the bet. So if
Speaker 3: you're asked to choose between black and red, there could
Speaker 3: be anywhere between zero and sixty black balls, you just
Speaker 3: assume there are zero and you bet on red. I
Speaker 3: tried to come up with a real life decision sequence
Speaker 3: that might help the contradictory behavior under MEU makes sense.
Speaker 3: So here's what I've got to imagine this. You're making
Speaker 3: plans for the afternoon and you don't know what the
Speaker 3: weather is going to be. It might rain, it might not.
Speaker 3: Don't know how to calculate that. You were thinking about
Speaker 3: maybe going out for a walk, but then again, considering
Speaker 3: that it might rain, you don't want to be caught
Speaker 3: out in a storm, so you decide instead to stay
Speaker 3: home and do some indoor activities. At the same time,
Speaker 3: you are also deciding what to do about the flowers
Speaker 3: on your front porch. They're drooping and they need some water.
Speaker 3: Now it might rain and then they would get all
Speaker 3: the water they need from that, But then again it
Speaker 3: might not rain, so you decide to make time to
Speaker 3: fill up a watering can and water them manually. This
Speaker 3: could appear inconsistent because you've made two different decisions, both
Speaker 3: on the bet that it will rain in one case
Speaker 3: and on the bet that it won't rain in the
Speaker 3: other case. It's possible that that's just self contradictory, or
Speaker 3: it could be perfectly self consistent and logical if you
Speaker 3: are considering a range of different probabilities of rain for
Speaker 3: the afternoon and then applying the most pessimistic one to
Speaker 3: each decision rather than just assuming one probability that applies
Speaker 3: to all decisions. Does that make sense?
Speaker 2: Yeah, yeah, I think so.
Speaker 3: And to be clear, there's no guarantee here that the
Speaker 3: pessimistic assumptions will be correct, because again, the information environment
Speaker 3: is truly ambiguous. You just can't know. That's what ambiguity is.
Speaker 3: But considering multiple probabilities and acting according to the most
Speaker 3: pessimistic one for each decision is theoretically a logical and
Speaker 3: consistent strategy. So the authors that support this model argue
Speaker 3: that it is actually a rational way. Ambiguity version might
Speaker 3: produce the apparently self contradictory results we observe, like the
Speaker 3: apparent contradiction comes from the fact that we're sort of
Speaker 3: coming up with different predictions for each bet instead of
Speaker 3: one prediction for the actual full state of affairs.
Speaker 2: Yeah. Though, of course, making all your decisions based on
Speaker 2: worst case scenario is not a great way to live your.
Speaker 3: Life, right, And I'm going to come back to that
Speaker 3: in a minute, because that is part of the critical assessment.
Speaker 3: Another theory that would make the Elsberg paradox behavior rational
Speaker 3: is what's known as show qu expected utility or CEU
Speaker 3: and the show K. There. That's a French name. It's
Speaker 3: cho q u e.
Speaker 2: T show k sounds delicious.
Speaker 3: Oh yeah, so sho K. Expected utility is the idea
Speaker 3: that when we evaluate a bet and the odds are ambiguous,
Speaker 3: we basically we do come up with a single internal
Speaker 3: belief about probability, but it takes a weird form. Instead
Speaker 3: of a probability, we use what the literature calls a capacity.
Speaker 3: So most of the time when we're trying to judge
Speaker 3: how likely something is to happen, together the likelihood of
Speaker 3: that event and the likelihood of its negation of not
Speaker 3: that event have to sum up to one hundred percent. Right,
Speaker 3: So like under normal probability, if there is a one
Speaker 3: third chance a ball will be read, there is a
Speaker 3: two thirds chance the ball will not be read. These
Speaker 3: complementary probabilities should always sum to one, or, if expressed
Speaker 3: as a percentages up to one hundred percent. CEU theory
Speaker 3: says that our internal representation of likelihoods for ambiguous events
Speaker 3: is not like this. Instead, when the odds are ambiguous,
Speaker 3: we operate on the basis of a capacity, which mathematically
Speaker 3: incorporates our lack of confidence in the situation by representing
Speaker 3: the chance of an outcome and its negation together in
Speaker 3: a way that does not have to add up to
Speaker 3: one hundred percent. And I apologize to the more informed people,
Speaker 3: I'm skipping over some mathematical complexity here, but this is
Speaker 3: the simplified version. Is if you take the example of
Speaker 3: the three color eurn, a person might begin with the
Speaker 3: objective information that you know thirty one third of the
Speaker 3: balls are red, so you know you actually have a
Speaker 3: one third chance that the ball you draws red, And
Speaker 3: then for the yellow and black balls, instead of coming
Speaker 3: up with with guesses that sum up to two thirds,
Speaker 3: which would be the actual sort of objective probability. Whatever
Speaker 3: the mix is, you pick some smaller probabilities, like you
Speaker 3: add in a maybe a one fifth chance that the
Speaker 3: ball is yellow and a one fifth chance that the
Speaker 3: ball is black. Obviously, these these cannot be the real
Speaker 3: objective odds. Again with the caveat on what are actually
Speaker 3: objective odds, but they can't be the real They can't
Speaker 3: represent reality because they don't add up to one and
Speaker 3: there are no other colors in there. But again, the
Speaker 3: values we come up with in these kinds of decision
Speaker 3: making processes don't have to be perfect at predicting real outcomes,
Speaker 3: and in fact they can't be because we are missing
Speaker 3: information that is the ambiguity. The point is that this
Speaker 3: is another self consistent way our minds could work while
Speaker 3: producing the behaviors observed in these experiments, like the missing
Speaker 3: percentage of likely outcomes and the calculation is missing to
Speaker 3: reflect the level of ambiguity we feel about the bet.
Speaker 3: So that's two main models, and there are other models
Speaker 3: for making sense of the Elsberg paradox behavior in these
Speaker 3: sorts of ways. But I think these give you a
Speaker 3: general idea of how this strain of thinking works. The
Speaker 3: other main way of thinking about ambiguity version is that
Speaker 3: it is not actually rational, like you don't need to
Speaker 3: find a way of making rational sense of it. Instead,
Speaker 3: it is a form of error or cognitive bias. And
Speaker 3: this is the thrust of the paper that I mentioned
Speaker 3: earlier from two thousand and nine by on the jar
Speaker 3: In Weinstein. The authors here argue in short, that ambiguity
Speaker 3: a version is actually a misapplied heuristic. It meaning it's
Speaker 3: a mental shortcut that might be truly useful in some scenarios,
Speaker 3: for example, in situations where we need to be cautious
Speaker 3: to avoid being scammed or manipulated, but this shortcut gets
Speaker 3: mistakenly applied to scenarios where it is not helpful, and
Speaker 3: misapplying the ambiguity version heuristic like this, they say, could
Speaker 3: cause you to like make different bets about the same
Speaker 3: thing when conditions are the same and no new information
Speaker 3: has been learned, so you know, like that's producing this
Speaker 3: contradictory or apparently irrational behavior, or it could cause you
Speaker 3: to treat non non informative information as informative. They also
Speaker 3: argue that relying on heuristics like pessimism coming back to
Speaker 3: your comment earlier, Rob, Again, that's always assuming the worst
Speaker 3: case scenario for ambiguous bets. If you actually do this,
Speaker 3: if you rely on a pessimistic heuristic in real life,
Speaker 3: this will systematically produce incorrect predictions and bad outcomes. It's
Speaker 3: actually not a good strategy to follow. Failure to make
Speaker 3: bets or decisions in the presence of ambiguity also causes
Speaker 3: us to never gain useful information because a lot of
Speaker 3: times we can only learn more about what the real
Speaker 3: odds are by making decisions in ambiguous conditions. You know,
Speaker 3: like past bets on ambiguity lead to more informed bets
Speaker 3: with higher certainty in the future because the previous bets
Speaker 3: and their outcomes are information gathering tools.
Speaker 2: Yeah, and of course we see this played out in
Speaker 2: the simplified world of games. If you want to get
Speaker 2: good at you know, particular card game or chess or
Speaker 2: anything like that, you need to be prepared to be
Speaker 2: beat a lot, you know. I mean, that's that's part
Speaker 2: of learning what your odds are with a native in play.
Speaker 3: That's right. So this strain of thinking says, no, ambiguity
Speaker 3: aversion is not a rational strategy for making decisions. Instead,
Speaker 3: it's it's more like an emotional bias that causes us
Speaker 3: to act on yes self contradictory beliefs and to make
Speaker 3: bad decisions because we do not like the feeling of ambiguity.
Speaker 3: And honestly, I'm not sure which strain of thinking is
Speaker 3: more on track. I've been reading about these and I'm
Speaker 3: not I don't know who's more convincing that like that
Speaker 3: it's part of rationality overall, or that it's not. The
Speaker 3: whole thing about ambiguity, of course, is that it's ambiguous
Speaker 3: whether or not you should bet on it, so there
Speaker 3: really is no objective answer, but I think there, I mean,
Speaker 3: what we're instead looking for is what is the most
Speaker 3: what is the most consistent way to explain the subjective behavior,
Speaker 3: rather than like, who's actually right about you know, the
Speaker 3: ambiguous outcomes because there's no way to know them in
Speaker 3: advance by definition. I do think the critical assessment makes
Speaker 3: a really good point about learning. You really do often
Speaker 3: have to be bold and make decisions in the face
Speaker 3: of ambiguity so that there will be more information and
Speaker 3: less ambiguity in future decisions. That seems like a highly
Speaker 3: salient point to me.
Speaker 2: Yeah, yeah, And would you say based on what you
Speaker 2: were looking at that it sounds like ambiguity aversion is
Speaker 2: itself adaptive in the grand scheme of things. Maybe it's
Speaker 2: one of these situations like type one errors in cognition
Speaker 2: false pos positives versus type two errors and cognition's false negatives,
Speaker 2: where in sort of the hypothetical tiger's hiding in the
Speaker 2: bush's scenario, this is absolutely adaptive. But then when taken
Speaker 2: into other aspects of life, especially modern life and all
Speaker 2: its complexity, it's not necessarily useful.
Speaker 3: Well, I mean that, I think you could think of
Speaker 3: it that way, and that might be one way of
Speaker 3: approaching the error theory, right, that it's a mental shortcut
Speaker 3: that is useful in some scenarios, again, especially when you're
Speaker 3: like trying to avoid being tricked or trying to avoid
Speaker 3: being taken advantage of by somebody who has superior information
Speaker 3: to you. But then you're misapplying it to scenarios where
Speaker 3: that's not really the case. You're just like you're using
Speaker 3: a defensive mental shortcut in a case where you don't
Speaker 3: really need to, and it's causing you to act with
Speaker 3: unnecessary levels of defense, which produce irrational behavior. And we've
Speaker 3: talked about other ways that that can be true. So
Speaker 3: I think that fits more with the error way of thinking.
Speaker 3: I think the other way of thinking would just say that, yeah,
Speaker 3: I mean this would probably assume it doesn't really comment
Speaker 3: on this, but it would just assume probably that it's
Speaker 3: adaptive because it is just part of our consistent decision
Speaker 3: making toolkit, and it's you know, just the same way
Speaker 3: that our brains decide that it's better to take a
Speaker 3: bet with a ninety percent chance of winning than a
Speaker 3: ten percent chance of winning. It also has this other function,
Speaker 3: which is this ambiguity of version function.
Speaker 2: Yeah, and like any toolkit, you want to use multiple
Speaker 2: tools depending on the actual situation. If you have an
Speaker 2: expansive toolkit and it's the screwdriver every time, even when
Speaker 2: you need to hammer a nail, yeah, that's probably not
Speaker 2: going to work out too well. But when you got
Speaker 2: to screw a screw in, yeah, you know you're golden,
Speaker 2: assuming it's the right dude ad at the end and
Speaker 2: not one of it's not the star.
Speaker 3: Do you go through the same one two process every
Speaker 3: time you find a sharp screw out on the road
Speaker 3: or on the sidewalk, where like I hit the same
Speaker 3: two thoughts every time and be like, first of all,
Speaker 3: it's like, ooh, pick it up, Glad somebody a child
Speaker 3: didn't step on this or a car hit this with
Speaker 3: their tire. And then the second thing is what did
Speaker 3: this come out of? Was it holding something important together?
Speaker 2: Oh? I never do the second step. I'm I always
Speaker 2: just stick at the first step, where I'm like, oh,
Speaker 2: glad nobody stepped on that or got that in their tire.
Speaker 2: I have saved the day. And then I carry on.
Speaker 3: If it's like near my house, I like, look at
Speaker 3: my house, and I'm like, something on. I don't know.
Speaker 2: If it's in the house, definitely, and I guess if
Speaker 2: it's in close proximity to the house, But if it's
Speaker 2: in the road, I'm just assuming, you know, I don't know.
Speaker 2: I just never think about it falling out of a
Speaker 2: vehicle in a like in a dangerous capacity. But maybe
Speaker 2: I should. Maybe that's an additional level of worry that
Speaker 2: I should begin to employ.
Speaker 3: I didn't mean a vehicle specifically. I mean it might
Speaker 3: be or a house or anything. There are all kinds
Speaker 3: of things that really need to remain stuck together.
Speaker 2: Yeah, I guess I just assume it's like it's work vehicles.
Speaker 2: They have surplus screws rolling around and they're just rolling
Speaker 2: out under the road.
Speaker 3: Let's hope that's the case most of the time, but
Speaker 3: I'm glad I could share that anxiety.
Speaker 2: All Right, a few other angles we want to touch
Speaker 2: on here. This first one. I'm not going to go
Speaker 2: in super deep on this one because this one is
Speaker 2: another highly economic topic, but it's a There's what's known
Speaker 2: as the competence effect. So we've already touched on the
Speaker 2: basics of this a little bit, but this is the
Speaker 2: term for the phenomenon by which we tend to be
Speaker 2: more ambiguity a verse in fields where we feel we
Speaker 2: lack experience or expertise. In economics and finance, this manifests
Speaker 2: in investors who are more willing to invest in familiar
Speaker 2: domestic stocks rather than complex foreign markets. And if you're
Speaker 2: like me, that sentence is like, yeah, well, I'm uncomfortable
Speaker 2: with either. I don't know my way, I don't know
Speaker 2: one from the other, so I just mark me down
Speaker 2: as ambiguity averse to either.
Speaker 3: But it seems to be making the point.
Speaker 2: Yeah, but this is apparently a thing. I believe this
Speaker 2: was first looked at in a paper by Chip Heath
Speaker 2: and Amos Tversky titled Preference and Competence in Choice under
Speaker 2: Uncertainty published in the Journal of Risk and Uncertainty in
Speaker 2: ninety one, and this found that people tended to stick
Speaker 2: to gut instincts in a familiar area versus even against
Speaker 2: a rational, diversified approach that gets into areas they're not
Speaker 2: that familiar with.
Speaker 3: This rings true for me. I know I am more
Speaker 3: ambiguity averse in domains of life that I don't understand
Speaker 3: very well, which is funny because we have to make
Speaker 3: decisions with ambiguous odds of success in both unfamiliar and
Speaker 3: in familiar domains. I mean, ambiguity does not leave reality
Speaker 3: just because you know what you're doing in a certain
Speaker 3: knowledge domain or hobby area or something like that. Having experience.
Speaker 3: You can have all the experience in the world and
Speaker 3: still there are things where it's just like you don't
Speaker 3: know what your odds are. So I think maybe the
Speaker 3: explanation for this difference is that in the unfamiliar domains,
Speaker 3: I'm more likely to worry that ambiguity is artificial and
Speaker 3: that I am being tricked or manipulated by someone who
Speaker 3: has superior knowledge of that domain, whereas in familiar situations,
Speaker 3: understand what amount of information it is normal to have
Speaker 3: and thus how much ambiguity is just natural and unavoidable,
Speaker 3: and thus the ambiguity that is there becomes easier to embrace.
Speaker 3: Does that make sense?
Speaker 2: Yeah? Yeah, And of course all this ends up coming
Speaker 2: back to the topic of not only like what do
Speaker 2: you know, but what do you not know? And what
Speaker 2: do you think that you know that you actually don't know.
Speaker 2: We've talked about this before on the show, and it
Speaker 2: always reminds me of a line. I had to look
Speaker 2: this up. I'd forgotten the source, but it was from
Speaker 2: the movie Body Heat. You have a characters played by
Speaker 2: Mickey Rourke. He says that, and this is a I'm
Speaker 2: going to paraphrase the quote a little bit. He says,
Speaker 2: anytime you try to commit a crime, they are about
Speaker 2: fifty ways that you could mess up, and if you
Speaker 2: can think of twenty five of them, you're a genius. Now.
Speaker 2: I don't know if those numbers are exact, but I
Speaker 2: like the spirit of the thing, you know, Like he's saying,
Speaker 2: You're going into a situation and you have this great
Speaker 2: degree of overconfidence. You don't realize all of the ways
Speaker 2: you could potentially fail, and nobody can have perfect knowledge,
Speaker 2: like you know, this is a quote that does recognize
Speaker 2: that there will always be a certain amount of ambiguity.
Speaker 2: But if you have expertise, that sort of cloud of
Speaker 2: ambiguity is going to be smaller. It's not going to
Speaker 2: go away completely, but it will be smaller.
Speaker 3: Well, I think yeah, and I think this.
Speaker 2: Yeah.
Speaker 3: The spirit of the quote is that like people often
Speaker 3: go into a crime thinking they're betting on red, that
Speaker 3: they're taking a known risk, when in fact they're actually
Speaker 3: they're going into an ambiguous risk where they don't understand
Speaker 3: how much risk there is.
Speaker 2: So anyway minor cinematic diversion, there now another higher stakes
Speaker 2: area for the individual concerning ambiguity and ambiguity. Aversion is
Speaker 2: how ambiguity often factors into the healthcare experience. I was
Speaker 2: reading about this. So there are two broad categories within healthcare.
Speaker 2: There's diagnostic ambiguity, this is where the underlying disease. There's
Speaker 2: ambiguity surrounding the underlying disease and how it works. And
Speaker 2: then there's therapeutic ambiguity, like how do we treat it
Speaker 2: or even cure it, and I imagine a lot of
Speaker 2: you out there have encountered examples of this. In these
Speaker 2: different ambiguities can lead to rather opposite choices, But due
Speaker 2: to ambiguity aversion, a patient might choose a treatment with
Speaker 2: known but terrible side effects over one with the chance of, say,
Speaker 2: a better outcome, but also unknown risks.
Speaker 3: Or because of ambiguity aversion, I think very often in
Speaker 3: healthcare will gravitate towards someone who offers them false certainty
Speaker 3: versus someone who is honestly communicating like unknowns about the
Speaker 3: level of risk.
Speaker 2: Yeah, communication is key, and this becomes important in a
Speaker 2: number of different ways. You know, is an impact of
Speaker 2: course on public health and highlights the importance of science,
Speaker 2: communication and healthcare, as well as the dangers of medical
Speaker 2: misinformation and conspiracy thinking. For instance, in the context of vaccination,
Speaker 2: ambiguity a version and can definitely take the form of
Speaker 2: vaccine hesitancy. And I want to stress again here that
Speaker 2: the ambiguity need only be perceived ambiguity. So if one
Speaker 2: has already bought into such statements, says, well, no one
Speaker 2: really knows how what these vaccines are, or no one
Speaker 2: really knows how they work. Just assuming that those statements
Speaker 2: are true, there's some large degree of truth to them,
Speaker 2: then there may be well enough ambiguity subjective ambiguity in
Speaker 2: place in the individual's mind to make them rather adverse
Speaker 2: to this perceived ambiguity and more likely to choose options
Speaker 2: that bring with them greater risk. But more of a
Speaker 2: communicated idea of certainty, like dubious alternative preventative and treatment methods,
Speaker 2: or just the idea of doing nothing at all.
Speaker 3: The body knows how to take care of itself, that
Speaker 3: kind of thinking, Yeah, which sounds very certain when delivered
Speaker 3: by a confident and charismatic speaker.
Speaker 2: Yeah. I was looking at a paper in Behavioral Medicine
Speaker 2: from earlier this year, Psychological Correlates of ambiguity aversion in
Speaker 2: the contest of COVID nineteen vaccination, And this was by
Speaker 2: Somanovic at All, and they found four different major takeaways
Speaker 2: here that I thought were interesting. They found that Americans
Speaker 2: who perceived higher ambiguity about COVID nineteen vaccines reported lower
Speaker 2: worry and lower perceived severity of COVID nineteen, which were
Speaker 2: each associated with lower vaccination intentions and lower information seeking
Speaker 2: about COVID nineteen vaccines.
Speaker 3: Okay, So if I'm understanding that, right, Americans who had
Speaker 3: lower confidence in the efficacy and safety of COVID vaccines
Speaker 3: were also for whatever reason, less worried about covid infection.
Speaker 2: Right. But at the same time, they were also just
Speaker 2: they were obvious, And this is kind of a no brainer, right,
Speaker 2: It would seemed to follow they would be less inclined
Speaker 2: to have any intention of being vaccinated, and then would
Speaker 2: be less inclined to seek out any information about said vaccinations.
Speaker 2: Their mind at this point is already kind of made up.
Speaker 3: Well, I think that's right, But it's also interesting to
Speaker 3: note like the counterintuitive ways forms that having your mind
Speaker 3: made up in this way can take, because sometimes the
Speaker 3: way that I think that is expressed is like sometimes
Speaker 3: it's just a statement of like, oh, yeah, nobody knows,
Speaker 3: nobody can know about the vaccines, and so it just
Speaker 3: becomes like this infinitely and unsolvably dangerous thing out there
Speaker 3: that you know, nobody you can never really have confidence
Speaker 3: in your mind is made up about it, but it's
Speaker 3: made up in a way that always just sort of
Speaker 3: like holds it as an unresolved danger.
Speaker 2: Yeah, yeah, yeah, And I'm sure that the individuals on
Speaker 2: that side of the argument might well make the counter
Speaker 2: argument that like, okay, well, people who trust in the vaccine,
Speaker 2: they're just they trust blindly. They've just made up their
Speaker 2: mind and they're not going to listen to any of
Speaker 2: the criticisms. And I mean, I disagree with that. But
Speaker 2: on the other hand, you know, I feel like, speaking personally,
Speaker 2: like I can't be like I'm not going to pretend
Speaker 2: to be like doctor Robert all the time where I'm
Speaker 2: making all of all of these I'm doing all my
Speaker 2: own research on you know, like health and dental concerns.
Speaker 2: Like ultimately, I have to trust in a professional who
Speaker 2: knows what they're doing and is certified in what they're
Speaker 2: doing and leave it to them to tell me what
Speaker 2: I should do, because I don't want to have all
Speaker 2: these decisions on me. I don't want to do my
Speaker 2: own research on everything. I've got enough research to do
Speaker 2: in and out during the week.
Speaker 3: Well, I mean about like medical matters. When people say
Speaker 3: do your own research ninety nine point whatever percent of
Speaker 3: the time, somebody who says that either is not doing
Speaker 3: any research at all, and that just means go with
Speaker 3: your gut feeling, or if they are doing research, it
Speaker 3: just means doing very bad research. It means relying on
Speaker 3: sources that you have no objective reason for thinking or
Speaker 3: giving you good information, and probably are just confirming your priors.
Speaker 2: Yeah, like I choose to research my health topic by
Speaker 2: picking up chariots of the gods.
Speaker 3: Yeah, I mean I would argue, of course, like doctors
Speaker 3: and healthcare professionals can be wrong. That's possible, and it
Speaker 3: happens all the time. But I think on average, you're
Speaker 3: going to do a lot better just like listening to
Speaker 3: doctors than like reading a Facebook post and then making
Speaker 3: up your own mind about medicine.
Speaker 2: Yeah. So this particular paper, I'm going to breathe through
Speaker 2: the other main bullet points. Basically, they came down to
Speaker 2: people who perceived higher ambiguity about COVID nineteen vaccines. They
Speaker 2: reported higher anger about COVID nineteen vaccines, which was associated
Speaker 2: with lower perceived severity of COVID nineteen. They reported lower
Speaker 2: happiness about the vaccines, which was associated with both lower
Speaker 2: worry and lower perceived a severity of COVID nineteen. And
Speaker 2: they also found that both Americans and Israelis who were
Speaker 2: looked at in the study who perceived higher ambiguity about
Speaker 2: COVID nineteen vaccines, reported lower feelings of relaxation from the
Speaker 2: COVID nineteen vaccine, which was associated with lower perceived severity
Speaker 2: of the illness itself.
Speaker 3: So you have these constellations of different tendencies acting together.
Speaker 3: You've got like a lower confidence of lower trust in
Speaker 3: a healthcare treatment that also seems to go along with
Speaker 3: having a lower concern or lower level of seriousness about
Speaker 3: the condition that that treatment is supposed to treat, less
Speaker 3: emotional positivity about the idea of taking the treatment, and
Speaker 3: all of this together. So it I mean, well, one
Speaker 3: thing this sort of suggests to me is that, of
Speaker 3: course this is obvious, but it just reminds us that
Speaker 3: when we are making decisions, we do, to some extent
Speaker 3: try to make rational decisions based on our beliefs, but
Speaker 3: we're also just like highly emotional creatures, and our decision
Speaker 3: making is deeply entangled with feelings we have about the
Speaker 3: things we're making decisions about. You know, it's not really
Speaker 3: possible for us to approach every decision in life as
Speaker 3: just like purely like odds and benefit maximizing machines. Like
Speaker 3: we have feelings about things and those feelings, whether we
Speaker 3: want them to or not do, influence the way we
Speaker 3: make decisions.
Speaker 2: Yeah, and they will, they will override reason and and
Speaker 2: all of us, all of us, is susceptible to this
Speaker 2: sort of thing. But yeah, another way that it's I
Speaker 2: think it's interesting and dreadful to think about all of
Speaker 2: this is that is that again, there's generally some degree
Speaker 2: of ambiguity with both medical diagnognosis and medical treatment. And
Speaker 2: I can say I can speak from experience, and again
Speaker 2: most of you can can can relate to this as well.
Speaker 2: It can be frustrating when you go to a doctor
Speaker 2: and instead of a clear course of action that you
Speaker 2: might want or a definite solution that you are seeking,
Speaker 2: you instead get a certain amount of ambiguity about what
Speaker 2: might be wrong and how it might be addressed. Because
Speaker 2: at the end of the day, I think we all
Speaker 2: want the Star Trek medical tricorder experience where someone's able
Speaker 2: to just scan us, perfect scan, see what ails us,
Speaker 2: and then tell us exactly what needs they need to
Speaker 2: do to fix this, probably with another device that they
Speaker 2: just kind of run up and down our body. But
Speaker 2: even with today's technology, it's it's more complex than that.
Speaker 2: In most cases, Meanwhile, where do we actually encounter this
Speaker 2: lack of ambiguity in the messaging? Again, it comes generally
Speaker 2: in different forms of alternative medicine, or in snake oils
Speaker 2: or conspiracy thinking, because none of these voices ever says, look,
Speaker 2: there's absolutely no evidence this works, but give it a shot,
Speaker 2: or we can't know for sure if lizard people run
Speaker 2: a secret government in Antarctica. But there's always plenty of
Speaker 2: ambiguity in their evidence, of course, if supplied at all,
Speaker 2: but you'll often find them maneuvering around that in their messaging,
Speaker 2: which again is low on ambiguity and high uncertainty. And
Speaker 2: like you mentioned earlier, when it comes to legitimate medical messaging,
Speaker 2: it tends to communicate both probability and risk. You'll get
Speaker 2: that list of fast talk side effects at the end
Speaker 2: of your advertisement for an actual certified medication, And again
Speaker 2: this is just the inherent uncertainty in even very modern medicine.
Speaker 2: Another paper I looked at was twenty twenty two's Vaccine
Speaker 2: Hesitancy and Cognitive Biases by Kassigliami at All, and this
Speaker 2: points out that vaccination education strategies long followed a fact
Speaker 2: based approach, but given our aversion to ambiguity, along with
Speaker 2: bias and other heuristics. These various cognitive biases in messaging
Speaker 2: have to be factored into the outreach, and of course
Speaker 2: this gets into the complex way in which public health
Speaker 2: and vaccine messaging have to attempt to counteract all the noise,
Speaker 2: sometimes by leaning more on empathetic and audience based approaches
Speaker 2: rather than fact based debate, because again, in many cases,
Speaker 2: the actual medical facts have baked in ambiguity, while the
Speaker 2: non scientific counter claims do not. You know, it's again,
Speaker 2: this is absolutely frustrating and increasingly dangerous, an increasingly dangerous
Speaker 2: part of our reality. But yeah, the voice saying that
Speaker 2: the vaccine has microchips in it that will turn you
Speaker 2: into robots, like, you know, there's no ambiguity to that statement.
Speaker 2: They're generally, it's generally very they're very clear. Uh, they're
Speaker 2: very certain in it. Whereas again, actual medical facts and
Speaker 2: actual medicine based arguments are going to have some level
Speaker 2: of ambiguity in their messaging.
Speaker 3: This is one of the things that makes communication about
Speaker 3: science generally, but especially about something very high stakes like
Speaker 3: like medical you know, medical science, medical treatments, makes it
Speaker 3: so difficult just because you have to You have to
Speaker 3: find this very difficult balance of like you you are
Speaker 3: compelled ethically to be forthright and honest about what you know,
Speaker 3: but you also have to wait to find a way
Speaker 3: to present that truth in a way that will be
Speaker 3: rhetorically effective and hit correctly. And uh, and that's so,
Speaker 3: like you are balancing things that somebody who is not
Speaker 3: bound by an obligation to be ethical and honest is
Speaker 3: not bound like they can only focus on the rhetorical
Speaker 3: part of the appeal, Like all they have to worry
Speaker 3: about is what I'm saying exciting and charismatic and convincing.
Speaker 3: They don't have the other side of the scale to balance.
Speaker 2: That's right, that's right. And obviously this easily spills over
Speaker 2: into other areas, you know, pseudo archaeology, pseudo paleontology, other pseudosciences,
Speaker 2: alternative history, ufology, and more, because, as we I think
Speaker 2: really strive to drive home and related episodes on this show,
Speaker 2: actual history and archaeology inherently contain ambiguity. Like all histories are,
Speaker 2: to some degree or another, imperfect. Some are just more
Speaker 2: imperfect than others. You know, you know, as much as
Speaker 2: we know about certain periods of the past and certain
Speaker 2: individuals and events. We still have gaps, we have disagreements
Speaker 2: about interpretations, we have uncertainties, and then we I'm reminded
Speaker 2: too of particularly Alan Moore's use of the the Cox snowflake.
Speaker 2: That's koc h in nineteen eighty Nine's from Hell, his
Speaker 2: graphic novel about Jack the Ripper. So, the Cox snowflake
Speaker 2: is a fractal curve that was first described by Neil's
Speaker 2: Fabian Helga von Kock in nineteen oh four. The idea
Speaker 2: here is that it has a finite area but an
Speaker 2: infinitely long perimeter, so lots of cremulations. And Moore's treatment
Speaker 2: of this is that history has a shape with infinite
Speaker 2: perimeter and finite area, a labyrinth of connections and repeated patterns,
Speaker 2: but that we never fully comprehend. Ah.
Speaker 3: That's interesting. So if I understand that right, it sort
Speaker 3: of explains why as you read more about history and
Speaker 3: learn more about history, you can, by incorporating more and
Speaker 3: more knowledge and holding it, you know, parallel in your mind,
Speaker 3: you can have in some ways a stronger and realer
Speaker 3: picture of the past. But also the the increasing informational
Speaker 3: complexity it makes everything increasingly blurry as well, like you're
Speaker 3: always finding it becomes harder to have it becomes harder
Speaker 3: to have like causal through lines and clear narratives about
Speaker 3: why history happens, because the more you know, the more
Speaker 3: other causal factors you can consider when thinking about, like
Speaker 3: why something happened in history. And ultimately it gets to
Speaker 3: the point where it's so complex that it's like who
Speaker 3: knows why anything happened?
Speaker 2: Right, right? And that was his point about like who
Speaker 2: was Jack the Ripper? You know, you can we end
Speaker 2: up with all of these just so many books, so
Speaker 2: many theories, so much literature and writing and conspiracy theories
Speaker 2: and so forth, and for the most part, it's all
Speaker 2: within the confines of that snowflake. The actual answer is
Speaker 2: outside the snowflake. You know, we can never we can
Speaker 2: never actually determine it with any degree of accuracy, just
Speaker 2: be conjecture. So you know. At the same time, conspiracy
Speaker 2: thinking itself engages in something akin to the cock snowflake,
Speaker 2: you know, because there's it's it's often an infinite search
Speaker 2: for hidden details, whether those details are there or not.
Speaker 2: But still the basic premise holds true. Actual history is complex.
Speaker 2: While the narrative provided by conspiracy thinking is generally simple
Speaker 2: and single track, leading to a singular force at the
Speaker 2: center of the entire conspiracy. Like it will be. It
Speaker 2: will be more akin to like why did this happen? Well,
Speaker 2: it's this evil cabal or this you know evil you
Speaker 2: know corporation leader and so forth, as opposed to well,
Speaker 2: there are multiple societal factors and historical anomalies that play
Speaker 2: into this particular reality. And again, more ambiguity in real life,
Speaker 2: less ambiguity or no ambiguity at all in the conspiracy argument. Yeah,
Speaker 2: comes back to it's like stocks. You know, I don't
Speaker 2: know anything about stocks, but I know that when I
Speaker 2: see that little advertisement at the bottom of a blog
Speaker 2: where and there's a picture of like an old person smiling,
Speaker 2: and it's like, this is a surefire bet stock that
Speaker 2: so and so has just identified, It's like, I'm instantly
Speaker 2: suspicious because it seems a little bit too good to
Speaker 2: be true. It seems like there's not much ambiguity to
Speaker 2: this particular suggestion would be a risky click. All right,
Speaker 2: one more area I want to touch here, because I
Speaker 2: was looking at a really recent paper on ambiguity a version. Okay,
Speaker 2: here's a hypothetical scenario. You're considering a couple of vacation options,
Speaker 2: and we'll assume for the purposes of this experiment that
Speaker 2: the cost and other matters are equal. Here, one is
Speaker 2: a trip to a family vacation destination that you've visited
Speaker 2: numerous times before, and the other is an entirely new experience.
Speaker 2: Maybe it's visiting a country you've never traveled to, or
Speaker 2: something of that nature. And then, as you're making up
Speaker 2: your mind, what do you do? You flip on the
Speaker 2: news and surprise, surprise, it's all negative. It's all traveling.
Speaker 2: Would this exposure to negative news influence your decision making
Speaker 2: and push you toward the less ambiguous choice, or would
Speaker 2: you still basically make your decision as if you would
Speaker 2: have if you didn't watch the news at all.
Speaker 3: Well, I guess it could go multiple ways. But yeah,
Speaker 3: I would tend to assume that increasing my anxiety would
Speaker 3: make me more ambiguity averse, and that I would be
Speaker 3: seeking more known odds and familiar experiences if my anxiety
Speaker 3: levels are higher.
Speaker 2: Yeah, yeah, you know, prior to reading this paper, I
Speaker 2: might have jumped at this thinking as well. I have
Speaker 2: very rarely altered travel plan to do to something I
Speaker 2: saw in the news. But I'll be the first to
Speaker 2: admit that news items can rattle my resolve with pet
Speaker 2: you know, they can make me more anxious. So I
Speaker 2: would have guessed, yeah, negative news can surely push one
Speaker 2: away from risk, away from ambiguity, and back into the familiar,
Speaker 2: and more to the point, might be likely to do
Speaker 2: so on the whole.
Speaker 3: Now, one of the only things I would think that
Speaker 3: might push me back in the other direction and is
Speaker 3: a finding we talked about in the previous episode where essentially,
Speaker 3: if the known odds are bad, people's ambiguity aversion to
Speaker 3: take the other bet lessons right. So, like in the
Speaker 3: three color Earn experiment, if instead of thirty red balls
Speaker 3: there are like five red balls, people at that point
Speaker 3: become more likely to bet on black because it's like, well,
Speaker 3: the odds of the thing you know about are terrible,
Speaker 3: so why not take a gamble on something else? So
Speaker 3: I wonder maybe if that could push you back the
Speaker 3: other way. Like my intuition is that anxiety makes you
Speaker 3: more ambiguity averse and just want to go with something
Speaker 3: where the odds are clear, But maybe anxiety makes you
Speaker 3: believe that Like essentially the odds of stasis are really bad,
Speaker 3: and thus you might as well take a gamble on
Speaker 3: something different.
Speaker 2: Yeah, yeah, you know we can. We also have to
Speaker 2: have to ignow knowledge that news reporting can certainly change
Speaker 2: the perceived odds of something happening. Like if you were
Speaker 2: to watch a news network, a hypothetical news network that
Speaker 2: was just twenty four hours coverage of snake bites, that's
Speaker 2: all they covered. Anytime anywhere in the world someone's beitten
Speaker 2: by a snake, they are there to cover it in full.
Speaker 2: This would maybe give you a certainly a heightened awareness
Speaker 2: of maybe the legitimate risks of snake bite, but also
Speaker 2: maybe an inflated feeling about your personal risks of snake bite.
Speaker 3: Yeah, okay, so that's different in that what I was
Speaker 3: just talking about was like just how general emotional affect
Speaker 3: could affect the way you reason, but it could also
Speaker 3: be content specific.
Speaker 2: You're right, yeah, But anyway, mostly what we're dealing here
Speaker 2: with is the effect here. So a recent study from
Speaker 2: Adelphi University looked into this. It was published in Frontiers
Speaker 2: and Psychology and titled negative news exposure does not affect
Speaker 2: risk or ambiguity a version. So their answer is pretty
Speaker 2: much in the headline. There is often the case. Now,
Speaker 2: this is another one of those small studies, I believe
Speaker 2: the working they worked with groups here of like eighty
Speaker 2: four and two hundred and twenty nine, so you know,
Speaker 2: as always, more research is required. This is not something
Speaker 2: you can just take to the bank, but it's an
Speaker 2: interesting possibility. The authors point out that while studies have
Speaker 2: found that negative effect can increase risk aversion and ambiguity
Speaker 2: a version, we didn't know I quote these effects generalized
Speaker 2: to more realistic negative stimuli such as watching the news.
Speaker 3: Oh okay, so maybe in previous studies it's been found
Speaker 3: that negative emotions can increase ambiguity version and risk aversion,
Speaker 3: and so you would just assume that stimuli like watching
Speaker 3: the news would would also increase those versions. But maybe
Speaker 3: it doesn't.
Speaker 2: Yeah, and you can see why this would be something
Speaker 2: worth knowing. I mean, not only from a general standpoint
Speaker 2: of understanding. You know, how people make choices based on
Speaker 2: their mood and what influences their mood. That's certainly valid
Speaker 2: and that's the main point of the research here, but
Speaker 2: also you can imagine it being very a very interesting
Speaker 2: topic for individuals buying advertisement time on say twenty four
Speaker 2: hour news network, especially if they're say, if they want
Speaker 2: to have an advertisement for some sort of adventure travel
Speaker 2: or something of that nature. You know, Bungee cords, I
Speaker 2: don't know, whatever you happen to be selling. So, in
Speaker 2: this particular study, one group was exposed to negative news,
Speaker 2: and in this case it was like news about a
Speaker 2: car crash, and the other group was exposed to neutral news,
Speaker 2: so not great news, not good news, not like a
Speaker 2: real fluff piece, but just something about train schedules, something
Speaker 2: nice and boring and man, maybe it's a little interesting.
Speaker 2: And they found that although participants who watched negative news
Speaker 2: reported a significant increase in negative effect, they did not
Speaker 2: differ from the neutral news group in their risk or
Speaker 2: ambiguity preferences.
Speaker 3: Interesting, Okay, so they said past studies had found negative
Speaker 3: effect increases ambiguity of version. They showed people bad news
Speaker 3: and it did increase negative affect, but did not increase
Speaker 3: ambiguity version.
Speaker 2: Right, right, So I don't think it means go ahead
Speaker 2: and consume all the negative news you want. It's not
Speaker 2: going to impact you. Like, no, it can and will
Speaker 2: impact you. But what the study seems to be suggesting
Speaker 2: rather is that like sort of incidental or realistic consumption
Speaker 2: of negative news is that that exposure is not going
Speaker 2: to be enough of a force in and of itself
Speaker 2: to move the scale and actually impact your decision making process. Again,
Speaker 2: on the whole this is this would be a generalization,
Speaker 2: and again it's based on you know, smaller study, and
Speaker 2: there's so many factors on top of this, so you
Speaker 2: could throw into the scenario. But both groups were equally
Speaker 2: likely to choose a certain gamble over an ambiguous one
Speaker 2: following the consumption of their media.
Speaker 3: Oh well, some just occurred to me. I have no
Speaker 3: reason to think this is really true, because I'm sure
Speaker 3: the authors would have done a pretty good job of
Speaker 3: planning this out. But like, what if the control group
Speaker 3: the train schedule news was actually pretty demoralizing. It's supposed
Speaker 3: to be a neutral control, but actually that made people
Speaker 3: equally ambiguity averse.
Speaker 2: How that would have been an interesting outcome? No, no, no,
Speaker 2: But my understanding is that basically the normal parameters of
Speaker 2: ambiguity aversion were in place, so people were still averse
Speaker 2: to ambiguity, but in equal measure, whether they had just
Speaker 2: learned about a car crash or about the exciting world
Speaker 2: of train schedules.
Speaker 3: Yeah, so they basically just conformed roughly to Elsberg's predictions.
Speaker 2: Yes, exactly. But again, so many studies come out about this.
Speaker 2: They're new ones all the time. It's just such a
Speaker 2: fascinating way to sort of get in and crunch how
Speaker 2: we make decisions in life based on how we deal
Speaker 2: with ambiguity and the inherent ambiguity of life.
Speaker 3: Yeah. That again, I can't emphasize this enough, Like, because
Speaker 3: these studies want to quantify the effect, they need to
Speaker 3: use these like fixed games that include you know, certain
Speaker 3: like certain odds and risk conditions where the odds are
Speaker 3: very clear. But in real life you're dealing with basically
Speaker 3: top to bottom ambiguity. It's real ambiguity all the time. Like, really,
Speaker 3: rarely do we encounter decisions where our probability of success
Speaker 3: is absolutely clear, it's clearer than others. Some decisions have
Speaker 3: clearer odds than others, but you never really know what
Speaker 3: your odds are.
Speaker 2: Yeah, I mean, that's one of the reasons we've talked
Speaker 2: about this before and the show. Is one of the
Speaker 2: reasons we like things like zombie apocalypse scenarios, not because
Speaker 2: we necessarily like the idea of the world ending, or
Speaker 2: of the dead coming back to life and trying to
Speaker 2: eat our brains. But baked into those scenarios, there's often
Speaker 2: like a simplification of how the world works, a removal
Speaker 2: of some degree of the ambiguity. And there's often still
Speaker 2: in any good thing, I think you're going to have
Speaker 2: a contemplation of ambiguity as well. But in broad strokes,
Speaker 2: you might have a scenario boiled down to like, Okay, well,
Speaker 2: now it's the living versus the dead. Now it's the
Speaker 2: clear good guys versus the bad guys. And what is
Speaker 2: the answer? Well, it's always blasting it with a shotgun.
Speaker 3: Right, Isn't it interesting how in most stories, any major
Speaker 3: change that happens to the characters is because of whatever
Speaker 3: the struggle in the story is about. It's not like
Speaker 3: totally random, out of nowhere exogynous events come in and
Speaker 3: completely change the story. Occasionally that happens, and people, I think,
Speaker 3: I think often find that quite interesting in storytelling because
Speaker 3: it's pretty.
Speaker 2: Rare, you where the cause of the scenario is ambiguous.
Speaker 3: You mean, we're like a major change maybe comes in
Speaker 3: the middle of the story and it has nothing to
Speaker 3: do with what the main struggle or plot of the
Speaker 3: story is just comes out of nowhere. Yeah, I can't
Speaker 3: think of an example off the top of my head,
Speaker 3: but I know there are some like this right in
Speaker 3: with your example.
Speaker 2: All right, we're gonna gohea and close up this step. So,
Speaker 2: but we'd love to hear from everyone out there. We
Speaker 2: know that everyone has experience with ambiguity in life, judging it,
Speaker 2: being adverse to it, rolling the dice anyway, and so forth.
Speaker 2: So right in, we would love to hear from you.
Speaker 2: Just a reminder that Stuff to Blow Your Mind is
Speaker 2: primarily a science and culture podcast, with core episodes on
Speaker 2: Tuesdays and Thursdays, short form episodes on Wednesdays and on Fridays.
Speaker 2: We set aside most serious concerns to just talk about
Speaker 2: a weird film on Weird House Cinema.
Speaker 3: Huge thanks as always to our excellent audio producer JJ Posway.
Speaker 3: If you would like to get in touch with us
Speaker 3: with feedback on this episode or any other, to suggest
Speaker 3: a topic for the future, or just to say hello,
Speaker 3: you can email us at contact at stuff to Blow
Speaker 3: your Mind dot com.
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