# Lernkarten

Nicolas Steinmann
Karten 51 Karten 3 Lernende English Universität 15.01.2022 / 06.06.2022 Keine Angabe
0 Exakte Antworten 51 Text Antworten 0 Multiple Choice Antworten

Representativeness Bias

People classify new information based on past experiences and classifications. Judgements based on stereotypes.

• People tend to overestimate the representativeness of single observations and small samples

• May result in overreaction and correction anomalies, e.g. reversal in prices

• People judge by similarity to familiar types, without regard to base rate probabilities.

• Tendency to see patterns in what is really random walk
– TechnicalAnalysis,e.g.randompatternsareusedforforecasting

Illusion of Control Bias:

People tend to believe that they can control or influence outcomes when, in fact, they can not.

Believe in technical analysis and trading signals or patterns.

Hindsight Bias:

People may see past events as having been predictable and reasonable to expect.

- Very similar to illusion of control bias.

Information Processing Bias (Überbegriff)

Errors in information processing leads to:

• misestimate of probabilities of

− Probable events.
− The probability of events.

− Future risks and returns.

Anchoring Bias:

When required to estimate a value with unknown magnitude, people generally begin by envisioning some initial default number—an “anchor”—which they then adjust up or down to reflect subsequent information and analysis. People place undue weight on the anchor.

Note: The “anchor” still works even if it’s not related to the actual problem at all!

Mental accounting bias

People treat one sum of money differently from another equal-sized sum based on which mental account the money is assigned to.

Examples:

• Treatment of real estates
• Handling of wins on the stock market: “lets take more bets – is funny money anyway ...”
• Spending money you won in a lottery or you had to earn.

Threepotentialframingoptions:

– Minimal
– Topical
– Comprehensive

Framing bias occurs when people make a decision based on the way the information is presented

Framing for Minimal
People consider only differences between local options. Example: Gaining $5, disregarding common features. Comprehensive Framing People consider something in relation to one other. Example: A customer might include both camera and calculator in relation to something else, for instance total monthly expenses Topical Framing People considers the context in which the decision arises. Example: The process of reducing the price of the calculator from$15 to \$10. People usually frame decisions in terms of topical accounts.

Example: The savings on the calculators are considered relative to their prices in each option

Overreaction and availability Bias

According to the availability bias, people tend to heavily weight their decisions toward more recent information, making any new opinion biased toward that latest news.

People base decisions on available information and resonation information, which they weight.

Those information can have several sources: It can be caused by retrievability, categorization, a narrow range of experiences, and resonance.

People take a heuristic (mental shortcut) approach to estimating the probability of an outcome. Sometimes they measure it based on how easily the outcome comes to their mind.