The Ostrich Effect

Hello People,

Motivation for writing this blog post.

I was actually listening to music in Spotify then suddenly I switched to podcasts. I was looking for podcasts related to Psychology and came across “Hidden Brain” hosted by Shankar Vedantam. I was scrolling through the list of podcast topics by Hidden Brain.
I have listened to “The Ostrich Effect”. So I have thought to write a blog post about it in this website.

*Please ignore my bad writing skills. I will certainly improve.

 

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Many of us are voracious consumers of information. And we are always looking out for a new way to take even more. We also confronted by unpleasant information. This unpleasant information often creates a paradox in the brain. This type of information also produces psychic pain and one of the oldest rules in the brain is to avoid the things that are painful. It is sometimes we shut it all out.

There is an old theory in economics about information

You should always be willing to hear information about finances or your health.

No matter how you feel about the information, there is one thing you should never do.
That is Person should never avoid information because information can never hurt a decision.

Less is never more when it comes to information. Here’s the thing humans are not always rational and when it comes to information.

Information can be Anxiety provoking and depressing. What do we do when something makes sad or depressed we turn away from it.

When the thing that is depressing is information, we say ” I don’t wanna hear about it

Social Scientists call this behavior ” Information Aversion” more commonly it is called “Ostrich Effect

In behavioral finance, the ostrich effect is the attempt made by investors to avoid negative financial information. The name comes from the common legend that ostriches bury their heads in the sand to avoid danger.

When stock Market goes down people will check their portfolio less often and they often check if the market goes up. It shows that information shows immediate pain they are anticipating the future losses. They don’t have losses yet. That information causes emotional pain because of that information.

Instead of doing the rational thing learning as much as possible about the topic, many of us do the opposite. We Stick our heads in the sands.

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This is true for more than just about the financial information.
Hidden brain conducted a survey, they asked their listeners who are addicted to news. But when the Donald Trump won the US presidential election. These particular people who are addicted to news became complete news block out. Headlines about the trump stress these people and cause them pain. That’s the key marker for ” Information Aversion”

Some people will avoid the information when it’s too much to digest. This is called “Information overload“.

Information aversion” is not because of overloaded information but because of unpleasant information.

People want information about more happier future.


Study 1
A study conducted where two envelopes labeled ” Big ” and ” Small” is placed before a person. There is a 10% chance that money will be in the envelopes. If money is present then 100$ will be in the Big envelope and 10$ will be in the Small envelope. They need to wait for 20mins to select or else they can pay some amount to immediately open one envelope.

83.4% people paid money to know beforehand. Most of them selected the “Big” envelope. Because winning a 100$ amount is more satisfying than winning a 10$ amount. Here we need to observe that knowing the information before 20mins by paying a certain amount doesn’t affect anything in their decision .

Study 2
Another study conducted whether people willing to pay to avoid unpleasant information.

This study is conducted at a university. A medical test is conducted to check whether students have HSV( one of the STD ). Many students initially agreed to check up. They have given a chance after drawing their blood to avoid knowing their result by paying 10$. Surprisingly 85.87% students avoided knowing the result. because they thought it may cause them unnecessary stress. Students who are in good mood are more likely to avoid the information( Ignorance is bliss).

Fear is an effective way about how people behave. Scare tactics are only useful for one time effective. For a long period of time(if you want to change your diet etc.,), these scare tactics are not useful.

Study 3

This study is conducted on 3000 American women belongs to large company insurance. These women are 50 to 64 aged. Every year these women are tested to get their mammogram which will help to find out whether they have breast cancer or not.

When a woman is diagnosed with breast cancer, her immediate co-workers reduced the propensity to have breast screening. This behavior continued for 2 years. If a woman is in the late stage of breast cancer, then this avoidance behavior is stronger. Seeing a colleague suffer made them avoid screening.


People who avoid information rationally know that they would be better half if they fully understood the bad news.

You should always be willing to find information about your finances and health.

But deep in the brain tells us to avoid things that are unpleasant, painful or scary. If we want people to pay attention to negative information, we can’t assume that they behave like rational robots, we need to communicate information accurately and give the people the capacity to process and deal the psychological pain.

Avoiding information doesn’t mean you are a fool but means a human.


Thanks to humans who read my blog post 😉 Keep Smiling.

Source : Hidden brain

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