Behavioural Finance

Availability Heuristic

Definition

What is Availability Heuristic?

Judging likelihood based on examples that come easily to mind.

Example in practice

A recent fraud story causes an investor to view every fund as fraudulent.

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The tendency to feel losses more strongly than equivalent gains.

The tendency to overestimate one's knowledge, forecasting ability, or control.

The tendency to seek or interpret information that supports an existing belief.

Incorporating environmental, social, and governance factors into investment analysis or ownership.

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