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Psychology of Misjudgment 18. Availability-Misweighing Tendency


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18. Availability-Misweighing Tendency

 

"The mental tendency echoes the words of the song: “When I’m not near the girl I love, I love the girl I’m near.” Man’s imperfect, limited-capacity brain easily drifts into working with what’s easily available to it. And the brain can’t use what it can’t remember or what it is blocked from recognizing because it is heavily influenced by one or more psychological tendencies bearing strongly on it, as the fellow is influenced by the nearby girl in the song. And so the mind overweighs what is easily available and thus displays Availability-Misweighing Tendency.

 

People have an innate ability to overemphasize information that’s right in front of them. Recency bias is a direct result of this. In investing, it leads to chasing returns."

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