Ostrich Effect

While the first of these approaches, physical avoidance, is most commonly associated with information avoidance in general and the ostrich effect in particular, each of these approaches is an effective way of avoiding unpleasant information. While the ostrich effect is usually viewed in a negative light because it represents an irrational decision to avoid information even in cases where such information can lead to an overall positive outcome, avoiding general information is not necessarily bad. situations in which this can be useful. Hence, you should be aware that even if you are looking for more information than usual due to the meerkat effect, you can still avoid useful information to some extent due to the ostrich effect. Ignoring does not mean not knowing, but deliberately avoiding data and information. [Sources: 5, 6]

We try to avoid unpleasant truths in the hope that if we don’t face a problem, it doesn’t exist. Ignoring a problem can make it worse, but it doesn’t exist in your head until you encounter it. If we ignore the problem and don’t think about its consequences, we will also avoid the negative feelings that it usually causes. Because we avoid cognitive dissonance and choose to maintain a positive image of ourselves, if this issue forces us to rethink some of our aspects and forces us to admit that we were wrong, we may choose to avoid it. [Sources: 0, 5]

Research points to a cognitive bias called the “ostrich effect,” in which people figuratively dip their heads in the sand and avoid information they think might be unpleasant. In particular, they may ignore information presented to them, or they may interpret this information in such a way as to ignore potentially disturbing consequences. One study, for example, found that investors are more likely to control the value of their personal portfolios when markets generally rally, but less likely to do so when markets are flat or falling. [Sources: 4]

For example, in a bear market, investors may ignore their portfolios in an effort to avoid negative information. Another example is when people avoid checking their bank account balance for fear of what the position might be. Finally, another common example of the ostrich effect is when people deliberately avoid information that can help them track the progress they are making towards their goals. [Sources: 6, 11]

Thus, falling prey to the ostrich effect means avoiding important information on how to improve. Obviously, they cannot cut their losses early and, ignoring this information, run the risk of worsening the situation. Avoiding information, postponing decisions, or postponing unpleasant situations later on leads to much worse consequences. When you go astray, you sometimes actively (but unconsciously) avoid bad news, even if it contains important information. [Sources: 7, 9, 12]

Carnegie Mellon University behavioral economist George Loewenstein coined the term “ostrich effect” to describe how investors bury their heads in the sand in a bad market. If you do not observe your behavior and thinking in critical situations, the ostrich effect will affect your thinking and make you react negatively to unwanted information. The ostrich effect bias is the tendency to ignore danger or negative information by ignoring dangerous or negative information or burying your head in the sand. The ostrich effect is a cognitive bias that causes people to avoid information that they think may be unpleasant. [Sources: 3, 7, 12, 13]

The ostrich effect, also known as the ostrich problem, is a cognitive bias that describes how people often avoid negative information, including feedback, that can help them track progress towards goals. It is a cognitive bias that causes people to avoid negative information, including any feedback that might help them understand how their goals are being achieved, especially when the information is perceived as unpleasant, unwanted, or elicits a strong negative emotional reaction. Ostrich effect bias is the tendency to avoid negative information and refuse to accept objective truth because it hurts. The meerkat effect is related to the ostrich effect, as both biases affect how people process information, especially when it comes to deciding whether to receive it or not. [Sources: 3, 6, 7, 10]

Galai & Sade (2006) used a psychological explanation they called the “ostrich effect” to explain the difference in profitability in fixed income markets, and attributed this abnormal behavior to a dislike of receiving information about potential temporary losses. According to the same article, Galai and Sade (2006) coined the phrase “ostrich effect”, which they attributed to abnormal behavior and reluctant to receive information about potential temporary losses. Dwayne Seppi stated that individuals are looking for 50% of the value of their investment. Reduce the frequency by 80% during negative market periods to avoid recurring bad news. In behavioral economics, the “ostrich effect” refers to the tendency to avoid negative financial information. In the field of finance and investment, this behavior can be partly attributed to the disposal effect: even if there is no logical meaning, it tends to minimize the perceived financial loss. [Sources: 2, 3, 8, 12]

They found that people who are very worried about their finances tend to ignore potential money problems and are less likely to seek help or seek a solution. [Sources: 12]

Another study from the University of Minnesota, for example, found that 20% of people who signed up for a weight loss program never weighed themselves, indicating that they were avoiding confirming signs of a problem. However, we humans tend to do this and it is considered a serious cognitive impairment. We come to the sobering conclusion that nation states and corporations are also exposed to the dangers of the cognitive biases to which we, as individuals, are exposed. Now that we know why organizations can be subject to these prejudices, we can better prepare ourselves to mitigate the impact of such future disasters. [Sources: 0, 5, 11]

Avoiding inconvenient information doesn’t make you stupid; it just confirms that you are human. Thus, learning to accept discomfort becomes an important step in overcoming your prejudices and finding information that may be unpleasant at first, but can save you a lot of mental anguish in the future. But even unconsciously turning into the notorious ostrich, over time your problems will only grow. [Sources: 7, 12]

If you’re a jaded ostrich and want to break the cycle of avoidance, there are several ways to prepare yourself for success. Write down the problems you encounter while avoiding information, and refer to them from time to time as a helpful reminder of the importance of dealing with such situations in a timely manner. [Sources: 7, 8]

In some situations, when we are too emotional and the situation makes us feel scared, it may be appropriate to seek help from an outside observer who can evaluate the situation more objectively and tell us whether we are really avoiding the problem. Without acknowledging that there is a problem, we will not actively collect information so that we can evaluate all options and formulate the best solution. [Sources: 5]


— Slimane Zouggari


##### Sources #####

[0]: https://ecotalker.wordpress.com/2020/04/21/everyones-an-ostrich-the-ostrich-effect-in-the-context-of-covid-19/

[1]: https://breakingdownfinance.com/finance-topics/behavioral-finance/ostrich-effect/

[2]: https://en.wikipedia.org/wiki/Ostrich_effect

[3]: http://writer.meteo24.nazwa.pl/hit/the-ostrich-effect-short-story

[4]: https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/bias-busters-lifting-your-head-from-the-sand

[5]: https://psychology-spot.com/ostrich-effect/

[6]: https://effectiviology.com/ostrich-effect/

[7]: https://www.techtello.com/ostrich-effect/

[8]: https://www.psychologytoday.com/us/blog/loaded/201904/the-ostrich-effect

[9]: https://educ8all.com/cognitive-bias-ostrich-effect/

[10]: https://www.shortform.com/blog/ostrich-effect/

[11]: http://econowmics.com/the-ostrich-effect/

[12]: https://coffeeandjunk.com/ostrich-effect/

[13]: https://www.thinkingcollaborative.com/stj/ostrich-effect