Uncertainty Changes Behaviour (But Boiling Frogs Doesn’t)

This was the question researchers at the University of New South Wales asked, and designed some innovative experiments to test this out.

First off they designed an experiment about buying and selling items. After a few turns it became clear that the strategy of selling to one individual, let’s call this Buyer A (out of two) was the most effective strategy (yielded the highest rewards on average). They then added uncertainty by suddenly changing the offers of Buyer A. Most participants then changed their strategy when faced with this unexpected change. The only thing is that the most effective strategy remained the same — selling to Buyer A was still the most profitable, but less reliable than before.

This explains a feature of human nature that uncertainty creates an immediate response to change something — even if this is less profitable or beneficial (with our rational distanced view). This also explains some of the behaviours that have appeared with the pandemic because uncertainty rose suddenly and dramatically. Normally rational people started engaging in less rational or beneficial behaviours.

“Given how many decisions we make under uncertainty in our everyday lives, the more we can understand about how these decisions are made, the more we hope to enable people to make good decisions,” Dr Walke

Next up though they also measured the “boiling frog” effect. The boiling frog effect is the situation (a myth actually) that if you put a frog in hot water it will jump out but if you put it into cool water and slowly turn up the temperature it barely realises it until it is too late and the frog is boiled. In reality the frogs do jump out at some stage — but it’s a nice analogy.

In this experiment they slowly changed the behaviour of buyer A, which was the most profitable buyer remember, until it was no longer the best option to sell to Buyer A. Did the participants change their behaviour? No, they didn’t, on average. This showed that slowly changing a strategy barely elicited a change in behaviour.

Though many people have observed the above scenarios there has little structured research to back this up and this shows two things:

• Sudden uncertainty elicits behavioural change even if it has worse outcomes than previous behaviours.
• Slow change does not elicit behavioural change even if it would, or should, be the best option.

Something to think about in daily life and especially for you business leaders out there!