Description

The ostrich effect, especially prevalent among financial investors, is the tendency to avoid dangerous or negative information by simply closing oneself off from this information, or “sticking one’s head in the sand” as an ostrich would. Among investors, this means avoiding negative investment information which could prove to be beneficial if needed. This behaviour can be found in a variety of other situations, and typically follows the same pattern: people are exposed to discomforting information, and instead of suffering through the resulting anxiety they choose instead to outright ignore the information.

Example

In finance, the ostrich effect occurs when investors are in dangerous or risky financial situations but choose to pretend that these situations do not exist.

Further Reading

The Decision Lab

The Decision Lab is a think tank focused on creating positive impact in the public and private sectors by applying behavioral science.

Get In Touch