Intuitive Rejection of Ambiguity
By intuitive choice we reject ambiguity & opt for predictability
Conduct this experiment.Take two boxes - Black & Green
In the 'Black Box' put 100 marbles (in a ratio of 50 white : 50 red). In the 'Green Box' put 100 white & red marbles but in no ratio.
For every red marble your friend pulls out blind-folded from the Black Box, he gets Rs.10/-. For white marbles pulled, he gets nothing. For the 'Green Box' too the rule is the same - Pull out red marbles blind-folded, earn Rs.10/-.
Inform friends upfront that ratio of white : red marbles in Black Box is 50:50 & ratio of white : red in the Green Box is unknown.
Now ask them to decide the box they would like to pull from - Black or Green ?
Any guesses ? 70% friends will opt for Black Box over the Green to pull out the red marbles .Wonder why ?
Black Box & Green Box actually are the same for winning. Chances are 50:50 to draw out the red marble from both the boxes . Chances of success are equally attractive statistically & economically. Yet 70% choose the Black Box over Green only because they do not average out the ambiguity in the Green Box but intuitively, dislike the greater uncertainty of the Green Box, which has no direct impact on the outcome !
Thats how we deal with ambiguity !