Economics Prospect Theory Questions
The availability heuristic in Prospect Theory refers to the tendency of individuals to make judgments or decisions based on the ease with which examples or instances come to mind. It is a cognitive bias where people rely on immediate examples or information that is readily available in their memory, rather than considering a broader range of possibilities or statistical data. This heuristic can influence decision-making by overemphasizing the importance of vivid or memorable events, leading to biased assessments of probabilities and outcomes.