Ambiguity Aversion

Ambiguity aversion is the tendency for people to prefer known risks over unknown risks. When faced with a situation where the outcomes are uncertain, individuals are more likely to choose an option with clear probabilities rather than one that's unclear or ambiguous, even if the ambiguous option has the potential for a higher reward. This behavior reflects a discomfort with uncertainty and a desire for predictability, influencing decisions in various contexts, from finance to daily life choices, where clarity provides a sense of security and confidence.