Has anyone done a list of similarities between Framing and Representative bias.
They both sound very similar for me.
Any guidance will be highly appreciated.
Thank you
Has anyone done a list of similarities between Framing and Representative bias.
They both sound very similar for me.
Any guidance will be highly appreciated.
Thank you
Framing is just the way something is presented, very diff from representativeness…
To me, more than framing, representativeness resembles availability…
Framing occurs when something is assessed based on how information is presented. Here are some examples from wikipedia where people make different choices on the same circumstance with only the presentation changed:
Representative bias comes from people’s past experiences. People try to make sense of the world by categorizing everything. The benefit of this is that people don’t have to evaluate every decision they make. Instead they can relate a current decision with something that seems fimilar to them. The most common example in finance is thinking a stock will be a good investment because you like its products.
I reccomend looking at any of the biases on wikipedia to get a better understanding of them.
Representativeness - is it not over putting too much weight on new information
a) Sample size neglect - small bit of new data means a lot to the investor
b) Base rate neglect - ignore the initial piece of information
I would like some clarification on the difference between Represenativeness vs Anchoring and Adjustment
Surely thinking a stock will be a good investment because you like it’s products = Halo Effect