Example of Action Bias
- A new manager implements multiple changes in their first month to demonstrate leadership, disrupting processes that were working well and actually reducing team productivity.
The pressure to show action led to unnecessary changes that made things worse. - During a market downturn, an investor repeatedly trades their portfolio trying to cut losses, incurring transaction costs and missing the recovery, ending up worse than if they had done nothing.
Action taken to feel in control produced worse results than patient inaction.
Note
Studied in contexts including sports (goalkeeper behavior), medicine (overtreatment), and finance (excessive trading).
