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Why do people make random and unpredictable decisions when uncertainty arises (such as buying toilet paper at the start of a pandemic)?
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 and 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.
