Uncertain Times: How We Make Decisions When We Don't Know What's Coming

Navigating Uncertainty: Understanding Its Impact on Decision Making

In this episode of PsyberSpace, host Leslie Poston digs into the complexities of uncertainty and its effects on decision-making. Leslie explores the psychological and physiological responses to uncertainty, including the role of the amygdala and the concept of Intolerance of Uncertainty (IU). The discussion encompasses cognitive biases like the availability heuristic and ambiguity aversion, and the differential impact of uncertainty across various demographics, including cultural, genetic, and socioeconomic factors. Strategies for improving decision-making under uncertainty are presented, such as leveraging system one and system two thinking, scenario planning, mental simulation, and decision hygiene. The episode concludes with practical advice on building tolerance for uncertainty and making more informed decisions amidst life's lack of predictability.

00:00 Introduction to Uncertainty
01:54 The Brain's Response to Uncertainty
02:47 Psychological and Physical Manifestations
03:38 Information Overload and Decision Making
04:51 Cognitive Biases and Heuristics
08:11 Neural Mechanisms and Lifespan Changes
10:19 Chronic Uncertainty and Societal Impacts
17:22 Improving Decision Making Under Uncertainty
20:35 Conclusion and Final Thoughts

References

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Ballesteros, L., & Kunreuther, H. (2018). Organizational Decision Making Under Uncertainty Shocks. National Bureau of Economic Research Working Paper Series, No. 24924. 

Barberis, N. (2013). The Psychology of Tail Events: Progress and Challenges. SSRN Electronic Journal. 

Bland, A. R., & Schaefer, A. (2012). Different Varieties of Uncertainty in Human Decision-Making. Frontiers in Neuroscience, 6, 85. 

Boswell, J. F., Thompson-Hollands, J., Farchione, T. J., & Barlow, D. H. (2013). Intolerance of uncertainty: A common factor in the treatment of emotional disorders. Journal of Clinical Psychology, 69(6), 630-645. 

Brown, D. J. (2020). Affective Decision Making Under Uncertainty. Lecture Notes in Economics and Mathematical Systems. 

Busemeyer, J. R., & Townsend, J. T. (1993). Decision field theory: a dynamic-cognitive approach to decision making in an uncertain environment. Psychological Review, 100(3), 432-459. 

Carleton, R. N. (2016). Fear of the unknown: One fear to rule them all? Journal of Anxiety Disorders, 41, 5-21.

Colk, H. (1988). Risky behaviour resulting from bounded rationality. Ergonomics, 31(4), 501-516.

Conejo, A., Carrión, M., & Morales, J. (2010). Decision making under uncertainty in electricity markets. International Conference on Power System Technology, 1-7. 

Degoulet, M., Willem, L., Baunez, C., Luchini, S., & Pintus, P. (2021). Decision-Making in Rats is Sensitive to Rare and Extreme Events: the Black Swan Avoidance. Working paper.

Edwards, W. (1961). Behavioral decision theory. Annual Review of Psychology, 12, 473-498. 

Ellsberg, D. (1961). Risk, ambiguity, and the Savage axioms. The Quarterly Journal of Economics, 75(4), 643-669.

Elston, T., Leuthold, H., Mackenzie, I., & Mittelstädt, V. (2024). Extreme Outcomes Accentuate Overweighting of Low Probabilities and Underweighting of High Probabilities in Experience‐Based Choice. Journal of Behavioral Decision Making, e2380.

Epper, T., & Fehr-Duda, H. (2017). A Tale of Two Tails: On the Coexistence of Overweighting and Underweighting of Rare Extreme Events. Working paper.

Etner, J., Jeleva, M., & Tallon, J. (2009). Decision theory under uncertainty. Documents de Travail du Centre d'Economie de la Sorbonne.

Etner, J., Jeleva, M., & Tallon, J. (2023). Decision theory under uncertaint

Episode Transcript

Leslie Poston (00:10):
Welcome to PsyberSpace. I'm your host,
Leslie Posten. This week, we'rediving into the muddy waters of
uncertainty and how it affectsour decision making. We're not
just talking about calculatedrisks here. We're exploring true
uncertainty where the oddsaren't clear, the variables are
unknown, and the future feelslike a dense fog.

(00:33):
Our listeners in The U. S. Andanyone else around the world
impacted by their recent turmoillikely know exactly what I'm
talking about. From job changesto global crises, uncertainty
colors our daily lives. Thinkabout it.
How many decisions have you hadto make recently where you had
absolutely no idea what mighthappen next? In today's episode,

(00:57):
we'll explore what happens inyour brain when it faces the
unknown, why uncertainty feelsso uncomfortable, and how we can
make better choices even when wecan't see the path ahead. I'm
super excited about today'stopic. As you know, poor
decisions under uncertainty canhave serious consequences from

(01:17):
burnout and anxiety to missedopportunities that could have
changed your life. The researchin this field has exploded in
recent years, and psychologists,neuroscientists, and behavioral
economists have uncoveredfascinating insights about how
our brains navigate the fog ofthe unknown.
By the end of this episode,you'll understand exactly why

(01:39):
uncertainty makes your brainfeel so uneasy, the mental
shortcuts your brain takes tocope, and practical strategies
to make better decisions whenthe future is unclear. So let's
step into the unknown together.When we face uncertain
situations, our brains ofteninterpret them as threats.

(02:00):
Research has shown that ouramygdala, the brain's alarm
system, becomes hyperactive whenwe can't predict what's coming
next. This isn't justpsychological discomfort.
It's a biological responserooted in our survival
instincts. Our ancestors neededto be cautious in unpredictable
situations, and that caution isstill hardwired into our neural

(02:23):
circuitry. Interestingly,psychologists have identified
something called intolerance ofuncertainty, or IU, which varies
significantly betweenindividuals. People with high IU
tend to find ambiguoussituations extremely distressing
and often experience anxiety,decision paralysis, or impulsive

(02:44):
choices when facing the unknown.It's like some people have a
lower threshold for uncertaintybefore their stress response
kicks in.
And when that stress responseactivates, our body releases
cortisol, our attention narrowsto potential threats, and our
ability to think broadly aboutpossibilities diminishes. The

(03:06):
physical manifestations ofuncertainty and tolerance are
also interesting. Researchershave found that people with high
IU often experience increasedheart rate, shallow breathing,
and even digestive issues whenfacing ambiguous situations.
These bodily responses create afeedback loop. The physical

(03:27):
discomfort makes thepsychological distress even
worse, which then amplifies thephysical symptoms.
This explains why uncertaintycan feel so overwhelming, even
when the objective risk isrelatively low. Today's
information environment doesn'thelp matters. We're constantly
bombarded with conflicting data,expert opinions that contradict

(03:50):
each other, misinformation andpropaganda from bad actors, and
just an overwhelming amount ofinformation that our brains
simply weren't designed toprocess. Many of us mistake
having more information forhaving a better understanding,
but that's not always the case.Information overload can
actually increase our sense ofuncertainty rather than reduce

(04:12):
it, creating a vicious cyclewhere we seek more data, but we
feel less and less confident inour decisions.
The discomfort of uncertaintyexplains many seemingly
irrational behaviors, like whypeople sometimes prefer a
definite negative outcome overan uncertain one that might be
better. For instance, studieshave shown that patients might

(04:35):
choose a treatment withguaranteed but mediocre results
over one with potentiallyexcellent but uncertain
outcomes. This powerful aversionto ambiguity drives many of our
decisions, often without us evenrealizing it. Our brains are
efficiency machines that usemental shortcuts, or heuristics,

(04:56):
to navigate uncertainty. Whilethese shortcuts can be helpful,
they also lead to predictablebiases.
Take the availability heuristic.We tend to overestimate the
likelihood of events we caneasily recall, so if you've
recently read about a planecrash, you might suddenly feel
nervous about your upcomingflight, even though the

(05:17):
statistical risk hasn't changedat all. Another fascinating bias
is ambiguity aversion, famouslydemonstrated by economist Daniel
Ellsberg. In what's now calledthe Ellsberg Paradox, he showed
that people generally preferknown risks over unknown risks,
even when the unknown optionmight mathematically offer a

(05:38):
better outcome. We're souncomfortable with ambiguity
that we will pay a premium justto avoid it.
Similarly, the way informationis presented to us, called
framing, dramatically influencesour decisions. The same medical
treatment, when described ashaving a ninety five percent
survival rate versus beingdescribed as a five percent

(06:01):
mortality rate, triggerscompletely different emotional
responses and decisions despitebeing identical information.
Perhaps most troubling is ouroverconfidence bias. When faced
with uncertainty, many of usbelieve we know more than we
actually do, especially in areaswhere we have some expertise.

(06:22):
This explains why financialadvisors confidently predict
market movements, Doctorssometimes dismiss diagnoses, and
business leaders make boldforecasts about uncertain
futures.
The reality is that a little bitof expertise in a domain often
increases confidence more thanit increases actual predicted
accuracy, leading to massiveerrors in judgment. This is one

(06:46):
reason I like to provideresearch lists with each episode
so you can dig deeper on yourown about the topics we discuss
and don't just have to take myword for it. Even though I have
multiple degrees and years ofexperience in various
psychology, business, andmarketing disciplines. These
cognitive patterns aren'trandomly distributed. They

(07:06):
follow predictable patterns tiedto how our brain processes
information.
For example, research intowhat's called the peak end rule
shows that when evaluatinguncertain experiences, we
primarily remember the mostintense moment and how things
ended rather than the average orsum of the entire experience.

(07:28):
This explains why a singleshocking outcome can
disproportionately influencefuture decisions in similar
contexts, even if it wasstatistically unusual. These
mental shortcuts aren't signs ofstupidity. They're built in
features of human cognition thathelped our ancestors survive,
but in our complex modern times,they can lead us astray.

(07:51):
Understanding these biases isthe first step towards
compensating for them.
By recognizing when theavailability heuristic might be
influencing your fear or whenframing effects might be swaying
your medical decision, you cantake a step back and consider
whether your intuitive responseis trustworthy. When we face

(08:12):
uncertain situations, our brainengages in a fascinating neural
tug of war. The prefrontalcortex, responsible for planning
and logic, battles with the moreemotional limbic system. Brain
imaging studies show theseregions lighting up differently
depending on how we're handlinguncertainty. Literally a battle

(08:33):
between our rational andemotional minds.
Our brain's reward system,driven by dopamine, is
constantly trying to predictoutcomes and their associated
rewards. When those predictionsare wrong, we experience what
neuroscientists call aprediction error, which forces
our brain to recalibrate.Interestingly, these prediction

(08:53):
errors affect peopledifferently. For some, they
cause anxiety and stress. Forothers, they trigger curiosity
and exploration.
Your personal response toprediction errors might help
explain whether you finduncertainty terrifying or
exciting. What's fascinating ishow uncertainty processing

(09:13):
changes across your lifespan.Children's brains, with their
still developing prefrontalcortex, process uncertainty
differently than adults. And aswe age, many people show shifts
in their tolerance for certaintypes of ambiguity. The anterior
cingulate cortex, which helpsdetect conflicts between what we
expect and what we experience,shows different activation

(09:37):
patterns at different lifestages, potentially explaining
why our relationship withuncertainty evolves throughout
our lives.
Functional MRI studies haverevealed increased activation in
the insula, a brain regionassociated with emotional
discomfort during uncertaindecisions. This suggests that
the discomfort of uncertaintyisn't just psychological, it's a

(10:01):
physiological response that wecan actually see happening when
we scan the brain. At the sametime, different people show
different patterns ofactivation, which helps explain
why some individuals seem tothrive under uncertainty while
others become completelyparalyzed by it. Most concerning
is what happens to our brainsunder chronic uncertainty. Long

(10:25):
term exposure to unpredictableenvironments can actually reduce
working memory capacity,increase stress hormones, and
make us more susceptible tomisinformation and simplified
narratives, especiallyconcerning right now.
Our cognitive resources becomedepleted when we're constantly

(10:46):
navigating uncertainty, whichexplains why periods of
prolonged ambiguity, likeeconomic recessions, regime
changes, or pandemics, can leadto collective exhaustion and
increasingly polarized thinking.Our brains crave clarity so
desperately that we will oftenembrace oversimplified

(11:06):
explanations just to escape thediscomfort of not knowing.
Stress and uncertainty create aparticularly dangerous
combination. When we'restressed, our attentional focus
narrows significantly, afibrolinod we call cognitive
tunneling. This tunnel visionmeans we literally see fewer

(11:29):
options and consider fewerfactors in our decisions.
It's like trying to navigate acomplex maze while only being
able to see a few feet in frontof you. The combination of time
pressure and uncertainty is alsoproblematic. Research by
psychologist Jorah Kanan hasshown that when people face both

(11:50):
time constraints and ambiguousinformation, they tend to reach
conclusions before consideringall available data. They jump to
solutions prematurely and stopsearching for better
alternatives. This explains whyemergency situations often lead
to flawed decisions.
The very moments when goodjudgment is most critical are

(12:11):
the moments when our cognitiveresources are most compromised.
Perhaps most troublingly, highstress combined with high
uncertainty makes peopleparticularly susceptible to
authoritarian messaging. When wefeel both threatened and
confused, we tend to gravitatetoward leaders or sources that

(12:32):
project absolute certainty, evenif that certainty is unfounded.
History has repeatedly shownthat societies under stress and
uncertainty become vulnerable tosimplistic ideologies that
promise clear answers to complexproblems. These stress responses
under uncertainty aren't justpsychological curiosities they

(12:53):
have measurable impacts on ourdecision quality.
Research comparing decisionsmade under calm versus stressed
conditions shows that stressreduces our ability to integrate
complex information by up to60%. Our working memory
capacity, essential for weighingmultiple options, can decrease

(13:13):
by as much as 35% when we'reboth stressed and uncertain
about outcomes. This degradationhappens so subtly that we rarely
recognize how much our cognitivecapacity has diminished until
after we've made our decision.The stress of uncertainty also
increases our tendency towardsgroupthink. Research shows that

(13:36):
when faced with ambiguoussituations, we conform more
readily to group opinions.
Seeking the psychologicalcomfort of consensus, even when
the group may be wrong. Thisexplains why during periods of
collective uncertainty, like afinancial crash or a health
crisis like a pandemic, we oftensee herd behaviors emerging from

(13:58):
panic buying to market bubblesto denying the efficacy of
masks. The psychologicalsecurity of moving with the
crowd can feel safer than makingan independent judgment when the
future is unclear. Not everyoneresponds to uncertainty in the
exact same way. Some personalitytraits make a significant

(14:20):
difference than how well peoplehandle ambiguity.
Research shows that individualshigh in trait neuroticismthe
tendency to experience negativeemotions intenselyoften struggle
more with uncertainty.Conversely, those high in
openness to experience typicallyadapt better to ambiguous
situations, viewing them asinteresting challenges rather

(14:44):
than threats. Cultural andenvironmental factors also shape
our relationship withuncertainty. Studies comparing
decision making across culturessuggest that people from
collectivist societies may bebetter equipped to handle
certain types of uncertainty byleaning on group wisdom and
shared responsibility.Meanwhile, those from more

(15:06):
individualistic cultures mightfeel greater internal pressure
when facing uncertainty alone.
Our early childhood experienceswith unpredictability also leave
lasting imprints on how weprocess uncertainty as adults.
The good news is that tolerancefor uncertainty can be
developed. Cognitive behavioraltherapists have pioneered what

(15:27):
they're calling uncertaintyexposure therapy, deliberately
putting people in ambiguous butsafe situations to build their
tolerance muscle. Just likeexposure therapy can help people
overcome specific phobias,gradually facing uncertainty in
controlled context can helpreduce the anxiety at risk. This
suggests that our relationshipwith uncertainty isn't fixed.

(15:50):
We can train ourselves to becomemore comfortable with not
knowing. As always, remember, ifyou are autistic or have a
similar neurotype, cognitivebehavioral therapy may prove
more challenging for you and youmight want to try another
solution, like somatic therapy,which can achieve the same
thing. Genetics also play asignificant role in uncertainty
tolerance. Twin studies suggestthat approximately thirty to

(16:15):
forty percent of our response touncertainty is heritable, with
certain genetic markersassociated with both anxiety
disorders and uncertaintyintolerance. This biological
predisposition interacts withour experience to shape our
unique uncertainty responseprofile.
Some researchers are evenexploring how these genetic

(16:35):
factors might influence careerchoices and life paths, with
certain professions attractingthose with either higher or
lower uncertainty tolerance.Socioeconomic factors play a
role as well. Someone withfinancial security makes
fundamentally differentdecisions under uncertainty than
someone living paycheck topaycheck. The luxury of being

(16:57):
able to take risks often dependson having a safety net. This
economic reality impactseverything from career choices
to health decisions toretirement planning.
Understanding these disparitieshelps explain why uncertainty is
experienced so differentlyacross socioeconomic groups and
why one size fits all adviceabout decision making often

(17:19):
falls flat. So, how can we makebetter decisions when the future
is unclear? One powerfulapproach comes from Daniel
Kahneman's work on System oneand System two thinking, which
we covered in our very firstepisode in more detail. To

recap (17:36):
System one is our fast, intuitive response system, and
system two is our slower, moredeliberate reasoning process.
When facing uncertainty, we cantrain ourselves to pause the
automatic system one responseand engage system two.
This might mean literallystopping, taking a deep breath,

(17:57):
and consciously consideringalternative interpretations of
the situation before we decide.Scenario planning, a technique
popularized in strategicleadership, offers another
valuable approach. Instead oftrying to predict a single
future, scenario planninginvolves imagining multiple
possible futures and preparingfor each. Organizations have

(18:20):
used this method for decades tonavigate uncertain business
environments, and we can applythat to our own lived
experience. The key isn't topredict exactly what will
happen, but to expand yourthinking about what could
happen, making you moreadaptable regardless of which
scenario unfolds.
Strategic use of mentalsimulation can also improve

(18:42):
decision making underuncertainty. By vividly
imagining different outcomes andyour responses to them, You
build mental muscle memory thatmakes you more adaptable when
facing the real situation.Military strategists, chess
grandmasters, and emergencyresponders all use forms of
simulation to prepare foruncertain scenarios. The key is

(19:05):
making these simulationsdetailed enough to trigger
genuine emotional and cognitiveresponses, which strengthens the
neural pathways you'll rely onwhen facing actual uncertainty.
Practices that build cognitiveflexibility can also help us
navigate uncertainty.
Mindfulness meditation, forinstance, has been shown to

(19:26):
reduce reactivity to uncertaintyby creating space between the
stimulus and the response.Journaling about past successes
in uncertain situations canbuild confidence in your ability
to handle ambiguity. Even simpletechniques like deliberately
considering the opposite of yourinitial judgment can help break

(19:47):
through cognitive biases andopen your mind to possibilities
you might otherwise dismiss.Finally, we can improve our
decision hygiene the practicesthat lead to cleaner, less
biased decisions. Techniqueslike premortem, or imagining
your decision has failed andworking backward to understand
why.
Red teaming, which is havingsomeone deliberately challenge

(20:10):
your thinking. And Bayesianupdating, which is
systematically revisingprobabilities as new information
arrives, can all improvedecision quality under
uncertainty. These approachesdon't eliminate uncertainty
completely, but they help usnavigate it more skillfully,
reducing the influence of biasand making our decisions more

(20:30):
robust to whatever the futureholds. As we wrap up today's
exploration of uncertainty anddecision making, I want to leave
you with some perspective.Uncertainty isn't a bug in the
human experience.
It's a feature. Every majoradvance in human history, every
creative breakthrough, everymoment of progressive growth has

(20:53):
required stepping into theunknown. The discomfort we feel
facing uncertainty is real, butit's also navigable. The
research we've covered todayshows that our response to
uncertainty isn't fixed. We canbuild our tolerance muscle
through deliberate practice.
We can recognize when our biasesare driving us toward poor

(21:15):
decisions. We can employ toolsand techniques that expand our
thinking beyond automaticresponses. And perhaps most
importantly, we can develop ahealthier relationship with not
knowing, seeing uncertainty notjust as a threat, but instead as
a space of possibility. Thinkabout how you personally respond

(21:36):
to ambiguity. Do you freeze?
Do you rush to judgment? Do youseek excessive information? Or
do you embrace the openness ofthe moment? Understanding your
own patterns is the first steptoward changing them. Try
applying one technique wediscussed today to the next
uncertain decision you face,whether it's a career choice, a

(21:58):
relationship crossroad, orsimply how to navigate our
increasingly unpredictablesociety.
Thanks for listening toPsyberSpace. I'm your host,
Leslie Posten, signing off. Asalways, until next time, stay
curious. And maybe this week,try staying a little more
comfortable with theuncomfortable feeling of not
knowing what comes next. And ifyou've ever made a decision

(22:21):
under pressure and looked backthinking, Why on earth did I do
that?
We'd love to hear your story.Share your experience with
uncertainty and how you handledit or wish you handled it on our
social media channels or in ourPatreon. See you next week.