Seeing eyes everywhere: spotlight bias and youth financial behaviour

The spotlight effect is a cognitive bias in which individuals systematically overestimate how much others notice and evaluate their actions, appearance, or decisions. The concept was first empirically demonstrated by Gilovich et al. (2000), who observed that individuals believed their behaviour was far more observable than it actually was. This bias stems from egocentric anchoring, in which individuals rely heavily on their own perspective and fail to account for others’ limited attention adequately. Although initially examined within social psychology, the spotlight effect has notable implications for financial decision-making.