Desire for Certainty

The desire for certainty bias is contrary to the decision theory which states that ambiguity about a probability should not affect choice. However, a study by Camerer showed that people have a bias for certainty. In the experiment, Ellsberg paradox was employed, it requires people to place bets on whether the next card drawn from a deck of twenty cards would be red or black. The study has two conditions, one where the participants were told the number of red and black cards in the deck. The other condition was not told. Camerer imaged the brains of the participants while they placed their bets. The study showed that when the probability is known, the striatum system is activated, when it was not known, activities of amygdala increases. This suggests that we are making decisions under uncertainty we are influence by our emotions, especially fear. Camerer also tested this experiment on patients with orbitofrontal lesion, these patients are unable to generate and detect emotions, and it was found that these patients behave rationally. It can see seen that uncertainty creates fear, and we tend to minimise negative emotions and hence we have a bias for certainty.

From: lowcabonsg.com

For Singapore context, the current energy saving logo was design to give a clear view of how energy efficient the electrical appliances are through the number of ticks on the logo. However, the logo emphasis on the amount of energy save with uncertainty as it with stated that result may vary. Such an uncertainty may deter consumers from buying as another bias for consumers is the need for certainty. Although it may be hard for business to give concrete value of how much can be saved. The benefit of giving a concrete figure, for example, the lower limit of the lost incurred for not changing to energy saving appliances can be stated for as low as $5 per month. Such a certainty in loss, coupled with the loss aversion bias mentioned previously would lead to greater engagement in purchasing of green appliances.