Psychological sources of ambiguity avoidance

Abstract

Ambiguity is characterized as uncertainty about the probabilities with which outcomes can occur. Previous research has established that subjects, when given a choice between two options differing in their degree of ambiguity, tend to prefer the less ambiguous option, exhibiting ambiguity avoidance. The present paper addresses the psychological sources of this behavior. Five plausible hypotheses for the basis of ambiguity avoidance were extracted from the literature, along with a sixth proposal which questioned the deliber-ateness of the behavior. None of the hypotheses had previously been sufficiently examined empirically. In a series of five experiments, each of the proposed explanations of ambiguity avoidance was tested. Of the six, only one, termed "other-evaluation," had an effect on subjects' choice behavior in an ambiguous situation involving monetary lotteries. The other-evaluation hypothesis states that a decision maker, in making a choice, anticipates that others will evaluate his or her decision; and, so, makes the choice that is perceived to be most justifiable to others. This choice is for the option having the smallest degree of ambiguity. It is concluded that the other-evaluation hypothesis offers the most promising direction for future research regarding the psychology of choice under ambiguity.