"Endowment Effect" is a cognitive bias. It is also known as “Divestiture Aversion” in psychology. Simply, it refers to our tendency to value an item more once we own it. We are always less willing to part with something which we own. Think of how a book on your shelf that you have not used for years seems to increase in value the moment somebody asks for it.
Endowment effect is applicable to ideas and methods equally
well. Once we commit a lot of time and effort to learn something, we start to
own it and become emotionally attached to it. Even if we find this useless at a
later stage, we are reluctant to disown it and discard it. Worse, we spend a
lot of time and energy to find justification to hang on.
This cognitive bias is surprisingly strong among traders.
During the initial stages of development; they get exposed to many things and
spend a lot of time and energy to master these skills. They hold on to these
old possessions for ever for no good reason. This will do a lot of harm than
good.
Ensure that you are spending your time and energy on
something “Actionable” .Your analysis should be focused on something easily “Recognizable”,
“Reactionable” and “Repeatable” otherwise you are analyzing to paralyze yourself.
Frequently do an audit. Eliminate the
non essentials and get rid of the time wasters.
Reduce, focus and simplify.
Yes true .....nice
ReplyDelete:) thanks ST.
ReplyDeleteI was holding on to an old possession, moved on (today) after deliberating past 8 months :). Thanks ST.
ReplyDelete