Saturday, February 23, 2008
The Ellsberg Paradox - Ambiguity Aversion
A great explanatory video of the Ellsberg Paradox has been posted over on the Curious Website. This describes Daniel Ellsberg's (left) famous ambiguity aversion experiment. As I describe in 'The Ambiguity Advantage' most people shy away from ambiguous situations. The masters of ambiguity (Mode Four individuals) on the other hand are very comfortable with and explore ambiguous situations - the very conditions (as the video shows) most others steer away from. In part just being one of a small number of players in any (ambiguous) situation gives an advantage on it's own. However there are specific techniques and more importantly frames of thinking the 'Masters of Ambiguity use. Mode four thinkers rarely fall victim to the decision making and problem solving biases we are currently exploring on the Ambiguity Advantage blog. How come? Stay tuned and all will be relieved.