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Availability Bias Definition
Availability bias is the tendency of humans to think that things that readily come to mind are more important than those not readily recalled.
A Little More on Availability Bias
Millions of people throughout the world die from the flu each year. Generally, people are more terrified by the prospect of the spread of Ebola. This is because deaths from Ebola are more rapid and likely. As such, it receives more media coverage. The fear of Ebola, but not the flu, is an example of availability bias. The information about ebola is readily available and easily recalled because of the high level of media coverage.
The biases mean that the brain is filtering the excess information since it is not able to process all the stimuli reaching it.
There are three ways of making decisions and drawing conclusions:
- Doing so with total certainty when one has all the relevant information.
- Doing so when one does not has any information
- Doing so with some level of risk where one has only part of the required information.
Cognitive biases involve making decisions without the relevant information, and this leads individuals to draw hasty conclusions that lead to mistakes. Mental biases are formed to fill gaps in the memories of individuals when the brain lacks data. Some of the biases that are usually developed by individuals include.
- Halo Effect. This is a bias that arises when an opinion is formed from just a single characteristic of a person. When one sees a character trait they deem attractive; they assume the other aspects are also attractive. Advertising agencies use this bias to promote products that are sponsored by a famous person.
- Availability bias. This is assessing the probability of an event occurring based on previous situations that have happened. The decision is influenced by the impact of an incident that occurred. For example, when a pilot is suspected to have caused an airplane accident, people start questioning the safety of air transportation even though it is the most reliable.
- An illusion of control. This is an illusion that occurs when people think that their actions have triggered an effect when in reality the result is only a coincidence. This makes people overestimate their ability to controlling events that are out of their hands.
Since people’s way of thinking is full of errors and biases, they need to stop making decisions based on intuition because it makes them make the wrong ones. They need to reason before they conclude. Over the past few years, some studies have been carried out to find out the availability of bias in people. One of them asked people to analyze what they think would be their most likely cost of death.
In such a study carried out at Ohio State University, people thought they were more likely to be killed on the street than by stomach cancer. Their minds were however biased because shootings had a greater media impact and this made their minds change the statistics.
A more significant and memorable event leads to a more distorted probability of occurrence. When an accident occurs involving the acquaintance of a person, that person immediately concludes that the roads are less safe. This conclusion is based on the emotion of the person.
Despite people not being as rational as they think, knowledge of cognitive biases helps them make better decisions that are based on incorrect interpretations and prejudices.
References for Availability Bias
Academic Resources for Availability Bias
The availability bias in social perception and interaction, Taylor, S. E. (1982). This paper investigates the presence of bias in the judgments made by an everyday social perceiver.
An availability bias in professional judgment, Dube‐Rioux, L., & Russo, J. E. (1988). Journal of Behavioral Decision Making, 1(4), 223-237. This study presents the estimation bias that is present in professional managers and the extent of effectiveness of the corrective measures undertaken to minimize it.
The cognitive perspective on strategic decision making, Schwenk, C. R. (1988). Journal of management studies, 25(1), 41-55. This article presents a discussion on the importance of strategic cognition and then summarizes research on a few significant topics within the cognitive perspective.
The nature of information and overconfidence on venture capitalists’ decision making, Zacharakis, A. L., & Shepherd, D. A. (2001). The nature of information and overconfidence on venture capitalists’ decision making. Journal of Business Venturing, 16(4), 311-332. This paper investigates whether venture capitalists are overconfident and the factors affecting the decision that leads to overconfidence. This paper also shows that even though overconfidence does not necessarily lead to a wrong decision, it is likely to hinder the learning and improvement of the decision process. This is because the venture capitalists may not consider the essential information or search for additional one to improve their decision.
From efficient markets theory to behavioral finance, Shiller, R. J. (2003). Journal of economic perspectives, 17(1), 83-104. This paper shows how the reliability of efficient market theory significantly reduced due to the discovery of anomalies and the evidence of excess volatility of returns. The value of this theory was nuanced and in the 1990s research was started on behavioral finance.
Egocentric biases in availability and attribution, Ross, M., & Sicoly, F. (1979). Journal of personality and social psychology, 37(3), 322. This study shows how five experiments were conducted to assess the biases in the availability of information in memory and attributions of responsibility for the actions and decisions that arose during a past group interaction.
All negative moods are not equal: Motivational influences of anxiety and sadness on decision making, Raghunathan, R., & Pham, M. T. (1999). Organizational behavior and human decision processes, 79(1), 56-77. This paper presents the results of three experiments showing the in gambling and job selection decisions; sad individuals are biased in favor of high-risk/high-reward options while an anxious individual is biased in favor of low-risk/low-reward options.
A psychological study of human judgment: Implications for investment decision making, Slovic, P. (1972). The Journal of Finance, 27(4), 779-799. This paper argues that successful speculators do not always have a full portrait of themselves in their minds, but they can stop when their intuition and what is happening out there are abruptly out of kilter.
Cognitive biases of Japanese institutional investors: Consistency with behavioral finance, Toshino, M., & Suto, M. (2004). Waseda University Institute of Finance Working Paper Series WIF-04-005. This paper presents the cognitive biases that the Japanese investors are subject to. This is because investors showed optimism in forecasting market returns and this was more significant for domestic markets and longer forecasting tome-horizons.
Availability: A heuristic for judging frequency and probability, Tversky, A., & Kahneman, D. (1973). Availability: Cognitive psychology, 5(2), 207-232. This article presents some judgmental heuristic where a person evaluates the frequency of classes by the ease with which the relevant instances come to mind.
Effects of the use of the availability heuristic on ethical decision-making in organizations, Hayibor, S., & Wasieleski, D. M. (2009). Journal of Business Ethics, 84(1), 151-165. This article examines the moral intensity which is a significant moderator of the ethical decision-making process. It explores the potential influence of the availability heuristic on the perceptions of moral intensity.