difference between availability and representative

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frankz888

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Availability - future probabilities are impacted by memorable past events
Representativeness - Too light weight on base rate or inferring too much from small new sample
They seem very close to me… its probably because I’m overwhelmed and want to die.
 
Availability –>comes to your mind quickly; like the loss that happened when last stock market crashed; advertising; hot stock that went up 50% last year;
Representativeness –> Make decisions on small sample; like considering only last two year drop in interest rates and concluding that rates will rise; mean reversion expectations; conclude managers are effecient considering last few years of performance.
Don’t die.
 
One is belief preservation and the other is information processing.
 
availability is making decisions based on past experiences or events, particularly stuff you can very easily recall.
representativeness is classifying new information based on how its been classified in the past and not giving a full analysis to the new information (whether it be examining that the new sample size is too small or not giving proper evaluation of the past information). basically amounts to “jumping on the new information’ without thinking twice.
 
What’s the difference between Representativeness and Conservatism bias?
Representativeness will overweight the new info while Conservatism will overweight the old info (or ignore the new info?) (kind of similar to Anchoring?)
 
Conservatism–> ignoring new info or under weigting new info or slow to change previous opinion or congnitive dissonance due to high cost involved in processing new information.
Anchoring –> Look for a specific #. Initial expection of rise in price to $x amount.
 
L3Crucifier wrote:
What’s the difference between Representativeness and Conservatism bias?
Representativeness will overweight the new info while Conservatism will overweight the old info (or ignore the new info?) (kind of similar to Anchoring?)
Click to expand...
i would not write this on the test but thats exactly how i think of it in my mind
 
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