The ambiguity effect is a cognitive tendency where decision-making is influenced by a lack of information, or ambiguity. It implies that people prefer choices for which the probability of a favorable outcome is known, rather than options where that probability is uncertain. This effect was first described by Daniel Ellsberg in 1961.
In a scenario involving a bucket of 30 balls, with 10 red and 20 that are either black or white, people are more likely to choose drawing a red ball for a guaranteed $100 than to risk drawing a black ball, even though the probabilities are the same (1 in 3) for both options.
To overcome the ambiguity effect, strive to gather as much information as possible about uncertain situations, or rely on statistical reasoning rather than emotional responses to ambiguity.