Anyone have a good tips on memorizing the distinction between perseverance versus processing bias?
One has to do with over weighting the base rates and under weighting new information. The other is mainly about a fundamental problem with processing the new or old information.
BP Biases: R I C C H > Here you begin with a belief - say your prediction/forecast
Rep - Ignore Base rate, Ignore Sample Size - - stick with your BS (Belief System).
IC - Mistake Quantity of Info for Quality of it - - stick with your BS
Conserve - Totally agree with Base rates - - stick with your BS
Confirm - You Take the Base Rate to the extent it confirms - stick with your BS
HindSight - You do not add lesson learnt - stick with your BS
Whereas, IP Biases: AA MA F AV Do not assume a belief system.
AA - Look at the news and randomly say its price is going to be 52 week high. You pretend to have computed the anchor point rationally
MA - You take your investment and construct a portfolio but less than rationally
F - You look for information but skew your decision based on how the information is presented not baed on your fundamental research
AV - You predict based on your most recent recollection
HTH - Pls add/correct where necessary