behaviour
The availability trap
The rule
Whatever is loud, fresh and easy to recall feels more likely than it is. The stock in every WhatsApp group feels like a sure thing.
Where it flips
Sometimes the loud thing really does matter. Where it misleads: you treat noise as proof. The fix: ask "would this matter if no one were talking about it?" and check the numbers, not the volume.
We guess how likely something is by how easily an example jumps to mind. The stock everyone is talking about, the sector in every headline, the crash still fresh in your memory, all feel bigger than the quiet facts. So money flows toward the loud and away from the boring, even when the boring has the better numbers.
A worked example
A company is in every news feed and WhatsApp group, so it feels like a sure win. A duller business with better numbers gets no attention, only because nobody is talking about it. [illustrative]
How to spot it
- ·buying whatever is talked about the most
- ·a fresh, dramatic event driving the choice
- ·the boring option ignored just because there is no buzz
Amos Tversky & Daniel Kahneman · Behavioural finance research