Availability bias

Keith Tan

An information-processing bias in which people put undue emphasis on information that is readily available, easy to recall, or based narrowly on personal experience or knowledge.

In financial markets, availability bias is evident in the way participants choose their investments. Investors are familiar with broad classifications of stocks and bonds, so their investment universe may simply be a mix of such securities. Some investors may also just stick with the big names, thus further limiting their investment universe.

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