The term “Ostrich Effect” was first coined by Israeli economists Dan Galai and Orly Sade in a 2006 research paper that explored investor behavior. Their study provided empirical evidence for the tendency of investors to avoid confronting their financial portfolios during market downturns.

Their work has been influential in the field of behavioral finance and has led to the term being adopted in other disciplines like psychology, healthcare, and organizational behavior.

On software teams, the Ostrich Effect can have particularly negative repercussions.

When teams make data-driven decisions, the Ostrich Effect can lead us to focus solely on metrics that paint a rosy picture, ignoring numbers that suggest a feature or product is underperforming. This skewed perspective can result in poor decision-making, such as allocating resources to less impactful areas.

On a broader level, the Ostrich Effect can manifest in team dynamics. We might avoid discussing conflicts, performance issues, or challenges, leading to a toxic work environment. This avoidance can result in unresolved issues that could potentially derail a project, lead to high turnover rates, or hurt the overall performance of the team.