Myopic Behavior

Term used to describe a short-sighted person focused only on the here and now

Author: Jake Heimowitz
Jake Heimowitz
Jake Heimowitz
IU Kelley School of Business Class of '25. I worked for Wall Street Oasis the summer following my freshman year of college at IU which undoubtedly broadened my understanding of financial research. I've since interned with Oppenheimer & Co as an Equity Research Summer Analyst and am excited to continue my career within finance.
Reviewed By: Andy Yan
Andy Yan
Andy Yan
Investment Banking | Corporate Development

Before deciding to pursue his MBA, Andy previously spent two years at Credit Suisse in Investment Banking, primarily working on M&A and IPO transactions. Prior to joining Credit Suisse, Andy was a Business Analyst Intern for Capital One and worked as an associate for Cambridge Realty Capital Companies.

Andy graduated from University of Chicago with a Bachelor of Arts in Economics and Statistics and is currently an MBA candidate at The University of Chicago Booth School of Business with a concentration in Analytical Finance.

Last Updated:November 18, 2023

What Is Myopic Behavior?

Myopic behavior is a term used to describe a short-sighted person focused only on the here and now. These people often make decisions that are not in their best interest because they do not think about the long-term consequences of their actions.

The concept of myopia, or near-sightedness, dates back to the early days of medicine. However, the term "myopia" as we understand it today, may not have been used in the same way in historical contexts.

Since then, our understanding of myopia has evolved considerably. For example, we now know that a refractive error causes it in the eye and can be corrected with glasses or contact lenses.

While our understanding of myopia has advanced, the exact causes may not be fully known. However, researchers have identified several risk factors associated with its development. These include genetics, lack of outdoor activity, and close-up work. 

However, in this article, we'll focus on the idea of myopic behavior. Such behavior can be seen in many different areas of life, from personal finance to politics. It is often the reason why people make impulsive decisions or take unnecessary risks.

To avoid such behavior, you must learn to consider the long-term implications of your actions.

In finance, myopic behavior, coupled with other factors, can contribute to suboptimal outcomes for investors. This behavior is when individuals or organizations make decisions based on short-term gain without considering the long-term implications.

Key Takeaways

  • Myopic behavior refers to a short-sighted focus on immediate gains without considering long-term consequences, leading to suboptimal decision-making across various aspects of life.
  • Psychological theories suggest that inherent tendencies toward immediate gratification and the influence of technology contribute to myopic behavior.
  • The increasing prevalence of myopia is attributed to our wired inclination for immediate rewards and the impact of technology, making instant gratification more accessible.
  • In finance, myopic behavior can result in poor portfolio performance, reduced returns, and increased risk.
  • The temptation for quick profits and the challenge of maintaining a long-term perspective in a fast-paced information environment contribute to the persistence of myopic behavior.

Understanding myopic behavior

Myopic decision-making is a form of decision-making based on short-term goals and objectives. This type of decision-making can often lead to suboptimal outcomes in the long term, as it does not take into account all of the potential factors affecting a decision.

In some instances, businesses may prioritize short-term profitability over long-term sustainability, but it varies, and many businesses prioritize long-term sustainability for continued success.

Unfortunately, this behavior can often lead to decisions that may be profitable in the short term but have negative consequences in the long term.

​​Various factors can contribute to such decision-making, including time pressure, lack of information, and emotional arousal. Additionally, myopic decision-making is influenced by cognitive biases, such as the sunk-cost fallacy and the status quo bias.

To avoid making such decisions, you must take a step back and consider the long-term implications of your actions. Additionally, seeking out diverse perspectives and consulting with others before making a final decision is helpful. 

By taking these precautions, you can help to ensure that your decisions are based on sound logic.


When making decisions with potential long-term implications, it is important to consider relevant factors that could affect the outcome. However, not all decisions require an exhaustive consideration of all potential factors.

The Principle Behind Myopic Behavior

The world is becoming increasingly myopic, with people fixated on short-term gain rather than long-term gain. This behavior can be seen in everything from personal finance to political decisions. But why are people behaving this way?

There are a few psychological theories that attempt to explain myopia. For example, one theory suggests that people are hardwired to focus on immediate gratification. 

This theory is supported by research that shows that people are more likely to make decisions that will lead to immediate rewards, even if those rewards are not as valuable as long-term rewards.

Another theory suggests that this behavior results from our increasing reliance on technology. With technology making it easier to get instant gratification, we are less likely to wait for long-term rewards. 

This theory is supported by research that indicates people are more likely to make decisions favoring immediate rewards over long-term rewards.


We tend to discount future rewards in favor of immediate gratification. This behavior is due to our natural inclination towards short-term thinking, which can often lead us to make suboptimal decisions.

Additionally, people might make myopic decisions due to a lack of information or understanding about the long-term consequences of their actions.

While myopic decision-making can often lead to adverse outcomes, there are specific cases where it might be perceived as beneficial, such as rationalizing a loss or seizing a time-sensitive opportunity.

For example, people might make myopic decisions in some situations because they rationalize a loss or try to avoid an even worse outcome. 

Additionally, people might make such decisions to gain a competitive advantage or to take advantage of an opportunity that might not be available in the future.

Myopic Behavior in Investing

Investors often fall victim to myopic behavior, which refers to over-emphasizing current information to the detriment of long-term planning. As a result, it can lead to sub-optimal decision-making and sub-par investment returns.

Myopia is often driven by fear and greed, which can cause investors to make impulsive decisions that they later regret. Therefore, investors must take a long-term view and focus on their goals to avoid such behavior. 

This behavior refers to a focus on short-term gains at the expense of long-term objectives.

One example is when investors chase performance. They may invest in a fund with recent solid returns without considering its long-term prospects, potentially leading to suboptimal portfolio performance and an elevated risk of future losses.

Investors should consider all relevant information when making investment decisions to mitigate the impact of myopic behavior and promote more informed choices.


Investors should also clearly understand their investment objectives and time horizon. By staying focused on long-term goals, investors can help avoid suboptimal decision-making.

The Costs of Myopic Behavior

This behavior is a form of short-sightedness that can lead to disastrous consequences in finance. For example, a myopic investor might only focus on the stock's short-term performance without considering the company's long-term prospects. 

This behavior can also lead to risky behavior. For example, a myopic trader might take on too much leverage to make quick profits. Consequently, this can lead to severe financial losses if the trade goes against them.

This behavior can have dangerous consequences for both individuals and the financial markets. Therefore, it is essential to be aware of the risks of myopic behavior and ensure that you are taking a long-term view when making investment decisions.

This behavior is often seen in finance, as investors focus on making quick profits rather than taking a holistic view of their investments. Such behavior can lead to several problems, including:

  • Poor portfolio performance
  • Reduced returns
  • Increased risk

So why does myopic behavior persist in finance?

One reason is that it can be challenging to resist the temptation of making quick profits. Additionally, it can be challenging to think long-term in a world where information bombardment and short news cycles prevail.

Researched and authored by Jake Heimowitz | LinkedIn

Reviewed and edited by James Fazeli-Sinaki | LinkedIn

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