Don't Bury Your Head in the Sand - The Ostrich Bias

"What you don't know can't hurt you." Really? Think again!

We've all been there - ignoring a problem, hoping it'll just go away.

Spoiler alert: it usually doesn't.

This cognitive quirk is pretty common, and by the end of this post, you'll know:

- What it is

- How it works

- Examples of where it shows up

- How people use it against you

- and how to out-maneuver it and those people.

Let's dive in.

Table of Contents

• Don't Bury Your Head in the Sand - The Ostrich Bia …

  • Bias of The Week - The Ostrich Bias

  • 1. Roots of The Ostrich Bias

  • 2. Examples of The Ostrich Bias in Life

    • Real-life Examples of Its Impact:

  • 3. How Could Someone Use This Bias Against You

    • Exploitation of willful ignorance:

    • Delayed action manipulation:

    • False sense of security:

    • Information control:

  • Bias Buster - How to Outmaneuver People Using This …

    • Practice Active Information Seeking

    • Implement the "Bad News First" Policy

    • Use Cognitive Reframing

    • Break Problems Down

    • Develop a Support System

  • Parting Words

Bias of The Week - The Ostrich Bias

The Ostrich Bias or effect refers to our tendency to ignore negative or uncomfortable information by "burying our head in the sand," much like an ostrich is mythically said to do when facing danger.

This cognitive bias leads us to avoid or disregard information that we perceive as potentially threatening or distressing, even when acknowledging this information could be beneficial in the long run.

The term was popularized by Dan Galai and Orly Sade in their 2006 paper titled "The 'Ostrich Effect' and the Relationship between the Liquidity and the Yields of Financial Assets."

The authors document an anomaly where government T-bills provided higher yields than equally risky illiquid assets like bank deposits over prolonged periods, despite the higher liquidity of T-bills. 

They argue this cannot be explained by taxes, risk, or transaction costs alone.

The researchers suggest this puzzle is due to the positive correlation between liquidity and the flow of market information. 

Investors exhibit the "ostrich effect" by avoiding the frequent flow of negative information associated with liquid assets, even if it means accepting lower returns.

As predicted by the ostrich effect, the difference in returns between liquid and illiquid assets is higher during periods of greater uncertainty. 

Investors' tendency to ignore negative information leads them to accept lower yields on liquid assets compared to illiquid ones when markets are volatile.

As behavioral economist George Loewenstein puts it:

1. Roots of The Ostrich Bias

The roots of this bias are deeply intertwined with:

1. Our natural aversion to negative emotions

2. The psychological concept of cognitive dissonance

3. Short-term relief vs. long-term consequences

This avoidance provides us short-term emotional relief but can lead to long-term negative consequences as problems often compound when left unaddressed.

Psychologist Leon Festinger's theory of cognitive dissonance plays a role here.

When new information conflicts with our existing beliefs or desired outcomes, we experience psychological discomfort.

To reduce this discomfort, we might choose to ignore the new information altogether.

Neuroscientific studies have shown increased activity in the amygdala - the brain's fear center - when we are presented with potentially threatening information.

This activation can trigger a fight-or-flight response, with "flight" manifesting as avoidance or denial of the information.

That’s why most people often struggle to make actions or do something they haven’t done before.

Moreover, the Ostrich Bias is reinforced by our tendency towards confirmation bias.

We're more likely to seek out and accept information that confirms our existing beliefs while avoiding or dismissing contradictory evidence.

That’s why it takes some time for a believer to stop believing for example, especially if such beliefs have been re-enforced by the culture, ideas consumed, etc.

I want you to think of this bias as a psychological defense mechanism.

We temporarily protect our emotional well-being by choosing to ignore any negative information.

However, this short-term comfort often comes at the cost of making informed decisions and addressing problems effectively.

2. Examples of The Ostrich Bias in Life

In a nutshell:

- Leads to avoidance of negative or threatening information

- Causes delayed action on important issues

- Can result in worse outcomes due to lack of timely intervention

Real-life Examples of Its Impact:

In Professional Life:

- A manager ignoring signs of financial trouble in their department, leading to bigger issues down the line.

- An employee avoiding performance reviews or feedback, missing opportunities for growth and improvement.

- A business owner disregarding changing market trends, potentially leading to obsolescence.

In Personal Life:

- Avoiding medical check-ups or ignoring symptoms, potentially allowing health issues to worsen. (Don’t Google your treatment always!)

- Neglecting to check bank statements or credit card bills, leading to financial difficulties.

- Refusing to acknowledge relationship problems, causing further strain and potential breakups.

In Society and Politics:

- Climate change denial, with individuals or groups choosing to ignore scientific evidence.

- Governments downplaying economic indicators that suggest an impending recession.

- Communities ignoring rising crime rates or social issues until they become unmanageable.

3. How Could Someone Use This Bias Against You

Exploitation of willful ignorance:

People might take advantage of your tendency to avoid negative information by withholding crucial details or presenting only positive aspects of a situation.

For example, a financial advisor might emphasize gains while downplaying risks, knowing you're likely to avoid digging deeper into potentially concerning information.

Delayed action manipulation:

By encouraging you to postpone dealing with issues, someone could benefit from your inaction.

A competitor might subtly reinforce your tendency to ignore market changes, gaining an advantage while you remain complacent.

False sense of security:

Others might exploit your preference for comfort by providing reassurances that everything is fine, even when it's not.

This could lead you to miss important warning signs or opportunities for preemptive action.

Information control:

By understanding your aversion to negative information, someone could selectively present data, shaping your perception and decision-making process to their advantage.

Bias Buster - How to Outmaneuver People Using This Bias and Get Your Way

Now that you understand how it happens and when it shows up most, it's time to outsmart others and stay ahead.

Practice Active Information Seeking

Regularly seek out diverse sources of information, including those that might challenge your current views or comfort zone.

This habit can help you become more comfortable with potentially uncomfortable truths.

It also opens your mind to potentially new concepts and thoughts that can change your entire life.

Implement the "Bad News First" Policy

Train yourself and your team to address negative information or problems head-on.

This can help you be mentally stronger and able to handle the snowballing of information.

Use Cognitive Reframing

When faced with negative information, practice reframing it as an opportunity for growth or problem-solving rather than a threat.

This can help reduce the emotional impact and encourage proactive engagement.

Break Problems Down

If the negative information or problem feels overwhelming, break it down into smaller, more manageable parts.

Focus on one aspect at a time rather than trying to tackle everything at once. This makes the challenge feel less daunting.

Develop a Support System

Surround yourself with trusted individuals who can provide honest feedback and encourage you to confront difficult truths.

Sometimes, external perspective can help overcome our natural avoidance tendencies.

It’s always better to listen and gather all the information and ideas possible so you can make an informed call.

Parting Words

If you liked this letter, please share your thoughts or any questions you might have 🙂

Until next time, stay vigilant!