2.

Representativeness Heuristic

- the tendency to make judgements about group membership based on physical appearances or one’s
stereotypes of a group rather than available base rate information

- assumption that any object (or person) sharing characteristics with the members of a particular
category is also a member of that category

- tendency to make an instant decision based on readily available attributes such as looks, behavior, or
current know facts, representativeness bias is the reason why people create stereotypes.

Ex. Mental judgements, first impressions, overconfidence

3. Anchoring and Adjustment

Decision is based on:

- Anchor – based on the given reference point

- Adjust – the anchor (either higher or lower)
 in making judgements under uncertainty, people start with certain reference point (anchor),
then adjust insufficiently to reach a conclusion.

4. Confirmation bias

- tendency to search for and use information that support, rather than refutes, one’s ideas.

- our decision can be further biased because we tend to seek out and listen to people whose views
confirm our own while we avoid those with dissenting view.

5. Hindsight Bias

- the tendency to report falsely, after the fact, that we accurately predicted an outcome

- it is also referred to as “I knew it all along effect”

- with this bias, people view events that happened as more predictable than they were and to represent
themselves as being more accurate in their predictions than they were.

Ex. Even though we helped him build it, I always knew it was a bad idea

6. Availability Heuristic

- prediction about the probability of an event based on the ease of recalling or imagining similar events.

Ex. What comes to mind quickly is deemed significant-sometimes incorrectly.

7. Base Rate Fallacy

- the tendency to ignore information about general principles in favor of very specific but vivid
information