NARRATIVES AND RATIONAL IGNORANCE
You learn something new every day, and today somebody mentioned the concept of “rational ignorance”, which I’d never heard before. It refers to occasions when the cost of acquiring knowledge about a topic is greater than the expected benefit of doing so. As in: a business may rationally decide to remain ignorant about the buying habits of a particular segment of their market if that group’s purchasing power is insignificant. The first thing I thought of when hearing this phrase (rational ignorance) was “Wow – my investment philosophy has a name!” This, referring to my normal preference to avoid reading what all the pros and pundits have to say about the markets; my decision to remain ignorant about most of those things, if you will.
But it’s not exactly the same thing, because I actually believe that the act of reading most of what others say brings negative consequences ... Log in or subscribe to continue reading.