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Availability Heuristic

Availability is a cognitive heuristic in which a decision maker relies upon knowledge that is readily available rather than examine other alternatives or procedures.

"There are situations in which people assess the frequency of a class or the probability of an event by the ease with which instances or occurrences can be brought to mind. For example, one may assess the risk of heart attack among middle-aged people by recalling such occurrences among one's acquaintances. Similarly, one may evaluate the probability that a given business venture will fail by imagining various difficulties it could encounter. This judgmental heuristic is called availability. Availability ia a useful clue for assessing frequency or probability, because instances of large classes are usually reached better and faster than instances of less frequent classes. However, availability is affected by factors other than frequency and probability. Consequently, the reliance on availability leads predictable biases,[...]"
Tversky and Kahneman (1974)

It is easier for us to recall information which has recently arrived. Stocks with very high levels of press coverage underperformed in the subsequent two years

"We find that overestimation of the subjective probabilities can cause overreaction and underreaction of expectations and, subsequently, asset prices."
Chiodo et al. (2002)

Overreact to news

Saliency can cause investors to overreact to new information.
=availability

Availability - evaluation about frequency, probability, and causality relationships that relies on how easily information is recalled from memory

Availability heuristic (how easily things come to mind): Tversky and Kahneman (1973).
Taleb (2004)

Top 10 Papers

1. TVERSKY, A. and D. KAHNEMAN, 1973. Availability: A heuristic for judging frequency and probability. Cognitive Psychology. [Cited by 604]
2. SCHWARZ, N., et al., 1991. Ease of retrieval as information: Another look at the availability heuristic. Journal of Personality and Social Psychology. [Cited by 103]
3. CARROLL, J.S., 1978. … an event on expectations for the event: An interpretation in terms of the availability heuristic. Journal of Experimental Social Psychology. [Cited by 38]
4. FOLKES, V.S., 1988. The Availability Heuristic and Perceived Risk. Journal of Consumer Research. [Cited by 23]
5. WAENKE, M., N. SCHWARZ and H. BLESS, 1995. The availability heuristic revisited: Experienced ease of retrieval in mundane frequency estimates. Acta Psychologica. [Cited by 19]
6. SCHWARZ, N. and L.A. VAUGHN, 2002. The availability heuristic revisited: Ease of recall and content of recall as distinct sources of …. Heuristics and biases: The psychology of intuitive judgment. [Cited by 19]
7. MACLEOD, C. and L. CAMPBELL, 1992. … accessibility and probability judgments: An experimental evaluation of the availability heuristic. Journal of Personality and Social Psychology. [Cited by 16]
8. CERVONE, D., 1989. … envisioning future activities on self-efficacy judgments and motivation: An availability heuristic …. Cognitive Therapy and Research. [Cited by 10]
9. SHEDLER, J. and M. MANIS, 1986. Can the availability heuristic explain vividness effects. Journal of Personality and Social Psychology. [Cited by 9]
10. GABRIELCIK, A. and R.H. FAZIO, 1984. Priming and frequency estimation: A strict test of the availability heuristic. Personality and Social Psychology Bulletin. [Cited by 9]

Bibliography

• The Availability Heuristic
• Summary of Availability Heuristic Judgment Examples
• AGANS, R.P. and L.S. SHAFFER, 1994. The hindsight bias: The role of the availability heuristic and perceived risk. Basic and Applied Social Psychology. [Cited by 5]
• BAILIS, D.S. and R.J. MACCOUN, 1996. Estimating liability risks with the media as your guide: A content analysis of media coverage of …. Law and Human Behavior. [Cited by 19]
• CARROLL, J.S., 1978. … an event on expectations for the event: An interpretation in terms of the availability heuristic. Journal of Experimental Social Psychology. [Cited by 38]
• CERVONE, D., 1989. … envisioning future activities on self-efficacy judgments and motivation: An availability heuristic …. Cognitive Therapy and Research. [Cited by 10]
• CHIODO, Abbigail, et al., 2002. A Measure of Subjective Probability with Economic Applications: The Availability Heuristic
• FIEDLER, K., 1983. On the testability of the availability heuristic. Decision making under uncertainty. [Cited by 6]
• FOLKES, V.S., 1988. The Availability Heuristic and Perceived Risk. Journal of Consumer Research. [Cited by 23]
• FOLKES, V.S., 1988. Perceived Risk and the Availability Heuristic. Journal of Consumer Research. [Cited by 2]
• GABRIELCIK, A. and R.H. FAZIO, 1984. Priming and frequency estimation: A strict test of the availability heuristic. Personality and Social Psychology Bulletin. [Cited by 9]
• JOERGENSEN, M. and D. SJOEBERG, 2000. The Importance of NOT Learning from Experience. Proceedings of European Software Process Improvement. [Cited by 6]
• LEVI, A.S. and J.B. PRYOR, 1987. Use of the availability heuristic in probability estimates of future events: The effects of …. Organizational Behavior and Human Decision Processes. [Cited by 8]
• LLOYD, A.J., 2001. The extent of patients' understanding of the risk of treatments. Quality in Health Care. [Cited by 25]
• MACLEOD, C. and L. CAMPBELL, 1992. … accessibility and probability judgments: An experimental evaluation of the availability heuristic. Journal of Personality and Social Psychology. [Cited by 16]
• MANIS, M., et al., 1993. Availability heuristic in judgments of set size and frequency of occurrence. Journal of Personality and Social Psychology. [Cited by 9]
• NELSON, C.H., 2001. Risk perception, behavior, and consumer response to genetically modified organisms. American Behavioral Scientist. [Cited by 15]
• OPPENHEIMER, D.M., 2004. Spontaneous Discounting of Availability in Frequency Judgment Tasks. Psychological Science. [Cited by 4]
• POSES, R.M. and M. ANTHONY, 1991. Availability, wishful thinking, and physicians' diagnostic judgments for patients with suspected …. Med Decis Making. [Cited by 16]
• READ, J.D., 1995. The availability heuristic in person identification: The sometimes misleading consequences of …. Applied Cognitive Psychology. [Cited by 6]
• ROTHMAN, A.J. and C. HARDIN, 1997. Differential use of the availability heuristic in social judgment. Personality and Social Psychology Bulletin. [Cited by 4]
• SANNA, L.J., N. SCHWARZ and S.L. STOCKER, 2002. When debiasing backfires: Accessible content and accessibility experiences in debiasing hindsight. Journal of Experimental Psychology: Learning, Memory, and …. [Cited by 24]
• SCHWARTZ, N. and L.A. VAUGHN, 2002. The Availability Heuristic Revisited: Ease of Recall and Content of Recall as Distinct Sources of …. Heuristics and Biases: The Psychology of Intuitive Judgment. [Cited by 6]
• SCHWARZ, N. and L.A. VAUGHN, 2002. The availability heuristic revisited: Ease of recall and content of recall as distinct sources of …. Heuristics and biases: The psychology of intuitive judgment. [Cited by 19]
• SCHWARZ, N. and L.A. VAUGHN, 2002. The availability heuristic revisited: Recalled content and ease of recall as information. The psychology of intuitive judgment: Heuristics and biases. [Cited by 7]
• SCHWARZ, N., 1998. Accessible Content and Accessibility Experiences: The Interplay of Declarative and Experiential …. Personality and Social Psychology Review. [Cited by 52]
• SCHWARZ, N., et al., 1991. Ease of retrieval as information: Another look at the availability heuristic. Journal of Personality and Social Psychology. [Cited by 103]
• SEDLMEIER, P., R. HERTWIG and G. GIGERENZER, 1998. Are judgments of the positional frequencies of letters systematical biased due to availability. Journal of Experimental Psychology: Learning, Memory, and …. [Cited by 20]
• SHEDLER, J. and M. MANIS, 1986. Can the availability heuristic explain vividness effects. Journal of Personality and Social Psychology. [Cited by 9]
• SLOVIC, P., et al., 2002. The affect heuristic. Heuristics and biases: The psychology of intuitive judgment. [Cited by 125]
• THALER, Richard, 1983. Related Disciplines, Journal of Economic Literature
• WAENKE, M., N. SCHWARZ and H. BLESS, 1995. The availability heuristic revisited: Experienced ease of retrieval in mundane frequency estimates. Acta Psychologica. [Cited by 19]
• WANKE, M., N. SCHWARZ and H. BLESS, 1995. The availability heuristic revisited: Experienced ease of retrieval in mundane frequency estimates. Acta Psychologica. [Cited by 5]
• WHITE, P.A., 1985. The availability heuristic and retrieval strategies in judgments of letter frequency. Unpublished manuscript, University of Auckland. [Cited by 2]