Economics Cognitive Biases Questions
The availability heuristic is a cognitive bias where individuals rely on immediate examples or information that comes to mind easily when making judgments or decisions. It influences economic choices by leading individuals to overestimate the likelihood of events or outcomes that are more readily available in their memory or experience. This bias can result in individuals making decisions based on easily recalled information, rather than considering a broader range of relevant factors or data. For example, if someone hears about a few instances of successful investments in a particular industry, they may overestimate the potential profitability of investing in that industry, ignoring other important factors such as market conditions or risks.