B.E. For Dogs: Ostrich Effect
B.E. for Dogs is a bi-weekly comic series that will examine concepts in behavioral economics from the perspective of our canine companions. Look out for new comics every other week!
Ostrich Effect: The ostrich effect is about avoiding bad news. When people worry they’ve fallen off track, sometimes they don’t want to know how they’re doing (even if feedback would be helpful for getting back on track). For example, a study by Jennifer A. Linde and colleagues in 2005 found that 20% of people who enrolled in weight-loss programs reported they didn’t weigh themselves prior to the program.
The ostrich problem has also been studied in financial contexts. A study in 2009 by Niklas Karlsson and colleagues looked at how often investors monitored their accounts in different market conditions. Researchers found that investors monitored their portfolios more frequently when the market was up and less frequently when the market was flat or failing.
More B.E. For Dogs:
#7 Decoy Effect
#9 Sunk Cost