Ostrich Effect

Israeli economists Dan Galai and Orly Sade coined the term in their 2006 paper "The Ostrich Effect and the Relationship between the Liquidity and the Yields of Financial Assets", published in The Journal of Business. Studying Israel's capital market, they found investors preferred assets with unreported risk over similar ones with frequently disclosed risk — paying a premium for what they called "the bliss of ignorance." The name draws on the popular (but false) legend that ostriches bury their heads in the sand to avoid danger.