You're right - I just rewatched that bit and she does ask if it's weird to give yourself disadvantage and the answer from the table was no. So she then declares that she'll have disadvantage on everything and Matt says OK.
So I guess my question is asked and answered for their table, but it still felt off to me and not something I would encourage at my table for the reasons [MENTION=97077]iserith[/MENTION] has noted above.
Glad we got past that bit - thx to those who looked it up.
At my table, i have not infrequently used disadvantage on initiative checks to represent a character who is hesitating for various reasons including fright but not FRIGHTENED. But at that event they blew past the init rolls pretty quick.
I myself think the idea of only roleplaying the character in ways that don't affect the group is a sort of surrender the role to the roll mindset. Nott drinking herself into drunk stage during a dungeon crawl which directly impacted looking for traps is another case well ensconced in the CR gameplay this season already that i recall (effects again worked out with GM buy-in - just like here.)
And i do not think its unrelated that at the same time the issue of role vs roll applies for the player flaw disad issue is brought up the other point of the Gm "dialing it back" was a separate point issue raised... because that showed me also at their table that the Gm also played the character (role) with Loranzo over the Roll (combat kill Xp) when lorenzo carried forward his focus on Keg at the end with allowing the party to survive and go spread his reputation.
If you are playing with a Gm who plays ruthless by-the-book game/roll first and foremost, its doubtful you will see taking an actual penalty *that will matter* inb combat for something as unimportant as "role." if its all "transactional" gaming where the closest to role is "i will give you an inspiration if you..." negotiation art-of-the-deal, doubtful you will be just doing sub-optimal on your own... get the deal in writing first.
On the other hand, if you have seen your Gm do it as well, if you have seen it play out before as not going to savage you and crush the event if you take a penalty that matters, etc etc etc then such things become something more folks are comfortable with and it becomes a routine part of your gaming play.
As seen at the even, not just the Gm but pretty much everyone at the table responded with "oh yes sure" with no hesitation.
I think context of the table is also a big element here.
I would have no hesitation as Gm in this case with long term players and a long running game with how things played out.
if it were a pick-up game in a FLGS with a bunch of strangers, i would have responded to the player with a more moderate suggestion such as "Hey, sure, but what about taking the penalty on your initiative instead of your attacks... shows hesitation - cuz the foghting itself is more ingrained and trained and fear in fight is normal. Would that sound good?"
As it was that penalty was irrelevant as others have pointed out.
But, to me, in many games i have played in and ran, whatever mechanic is used for role-playing flaws, the stronger normal tendency in games is to reward *actual* penalties not just cosmetic lip service to penalties. Many point buy flaw systems have defined problems like "takes extra damage" or other such penalties right alongside the psychological issues.
To me the biggest single issue that affected the outcome was the combo of Nott being out of the fight (so his rogue sneak damage pincushion was lost) and to a significant degree Molly's taking himself out. Not sure either would have turned the tide but it sure would have made a different series.
Like many battles, it was lost before it began.