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Researchers have also observed a behavior that could be considered the opposite of overconfidence. Self-handicapping bias occurs when we try to explain any possible future poor performance with a reason that may or may not be true.
Things To Know
- Self-handicapping bias: when we try to explain away any possible future poor performance.
An example of self-handicapping is when we say we’re not feeling good prior to a presentation, so if the presentation doesn’t go well, we’ll have an explanation. Or it’s when we confess to our ankle being sore just before running on the field for a big game. If we don’t quite play well, maybe it’s because our ankle was hurting.
Most of us use these excuses
As investors, we may also succumb to self-handicapping, perhaps by admitting that we didn’t spend as much time researching a stock as we normally had done in the past, just in case the investment doesn’t turn out quite as well as expected. Both overconfidence and self-handicapping behaviors are common among investors, but they aren’t the only negative tendencies that can impact our overall investing success.