Decision Making: Availability Bias

Great decision makers are highly valued in every field of work. To make decisions you have to possess a certain level of knowledge, take on the responsibility for the outcomes, and be able to act fast.

Some of us lack a certain skills therefore making decisions in daily life is more difficult for some people than others. I have recently taken a class called Applied Decision Analysis. The course depicts different qualitative methods that businesses could use to make forecasts, decisions, and predictions based on the past available data. Based on available tools in Excel, you can calculate the error involved in making a particular decision, and you can calculate a certain relationship between different sets of data.

However, when the data is limited and you have to make a decision based on your own judgment and experience even the most objective decisions can be affected by biases.

In this blog I would like to focus my attention on a particular phenomenon called Availability Heuristic, which is also known as Availability Bias. 

Would you agree with me that as human beings, when making decisions we often take into consideration our past experience, even when it is hardly relevant to our present and future. Moreover, we are subject to several external influences and may vary our behaviour as a function of our concurrent feelings and opinions. As a result, our decisions and, therefore, our actions are not often rational.

If you don’t agree with me read further, if you do read further to find out more.

I tend to believe that unpleasant memories fade. Looking back at my childhood, I remember mostly the carefree time, fun summers, and all the great moments with family and friends. I don’t remember many negative memories about my childhood. This particular mind-trick is called Availability Heuristic.

The availability heuristic refers to people’s tendency to determine the probability of an event according to how easy it is to recall similar examples and, instead of analyzing all available data, making a decision based on memory.

Possibilities that are easier to remember will be perceived as being more likely than those that are harder to picture or difficult to understand. Availability heuristic influences more of our decisions. You can encounter it in politics, finance industry, even at a doctor’s office. When someone makes a choice after a recent plane crash news to drive instead of taking a plane is a decision based on Availability Heuristic bias.

Tversky and Kahneman established that people give more weight to examples that are easier to recall or imagine as events that are more likely to occur in the future. (Trvesky, 1974)

An important first step in overcoming those biases is being aware that decisions can be biased. Scientific studies have shown that people with certain personality traits are prone to the availability bias. Schwarz found that people who have great faith in intuition and people who feel powerful tend to be affected more strongly by how easy it is to retrieve memories than by the content they retrieve. (Sanna, 2003)

Topics of biases are extremely interesting and go deep into human psychology. I am looking forward to the discussion on this topic.

 

Folkes, V. (1988). The Availability Heuristic and Perceived Risk. Journal of Consumer Research. Vol. 15, pp. 13-23

Kliger, D., & Kudryavtsev, A. (2010). The Availability Heuristic and Investors’ Reaction to Company-Specific Events. Journal Of Behavioral Finance11(1), 50-65.

Sanna, L., Schwarz, N. (2003) Debiasing the hindsight bias: The role of accessibility experiences and (mis)attributions. Journal of Experimental Social Psychology. Vol 39, 3, (287-295).
http://www.sciencedirect.com/science/article/pii/S0022103102005280

Tversky, A. and Kahneman, D. (1974) Judgment under Uncertainty: Heuristics and Biases. Science.

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12 thoughts on “Decision Making: Availability Bias

  1. Interesting topic you chose to write your blog on. I think the way I make decisions is based largely on feel or from my last experience of/with something. I’m curious to know if this is due to one’s personality or if all humans have the availability bias. Another thing, since I am a feeler, and make decisions based on my feeling, does this mean that I am lazy, if the facts are there for me to research, or is it because I feel more comfortable making decisions this way. HMM I will have to research more on this topic and comment again. Till then…

    • Thank you Jordan for your comment. I truly think all humans can have tendency for availability bias. Availability bias is how we extract the memories we have, it’s not purely decision made based on the past; it is how we overestimate the probable outcome based on how recent or well the memory is stored in our memory.
      Some people are very lucky and make decisions relying on the gut feeling and tend to be correct most of the time, but this is a different phenomenon.
      Here is a very good example of Availability Bias: http://visualbloke.wordpress.com/2012/02/11/sharks-and-the-availability-bias/

      -Anastasia

    • Wow Anastasia, that was really an interesting read, thanks for sharing that with us.

      I have to agree with you about the old memories, thinking back I can’t remember nearly as many bad memories as I can good memories, but then again, why would I want to remember the bad ones, right?

      I think most of my decisions are based off benefit gained. I will buy something if I can gain something from using it, I won’t buy something just to let it sit there.

      Same goes for my career and life altogether. I made the decision to go back to school and finish my degree, to gain the benefit of a higher salary and high job outlook. I have added another interesting article based on decision making below, feel free to take a read. It goes into detail about decisions as intuition, decisions as calculations, and decisions as coherence.

      http://cogsci.uwaterloo.ca/Articles/Pages/how-to-decide.html

      • I am glad you found my post interesting. The article you have provided is extremely detailed, i think ‘decision as intuition’ topic applies to my blog post. As people rely on their intuition they might forget to consider important facts involved or other available options. Thank you for your comment!

  2. Good post Anastasia!
    I read Jordan’s comment, and like him, I too tend to make decisions largely based on past experiences and feelings. But I think that is a human quality. Past experiences are supposed to teach us lessons, so by using past experiences, it’s as if we have already conducted the research. I read an article about good decision making in the Harvard forum business forum; Luis X. B. Mourao said that “… while (a model) helps to diligently collect and analyze relevant data, it only gets you so far. Add experience and it will get you a step further.” I have to agree with him. If we have to collect and analyze data for everything, it would take us too long to make a decision. Sometimes it could be necessary, but lets face it, making decisions based on past experiences can also save time. For example, if a child burns his hand in fire, would he actually want to put his hand in the fire again? If he did, the result would be the same as the first time….he’d get burnt.
    So, I agree with your post completely, we do tend to make decisions and form opinions based on our perceptions and experiences. I grew up in South Africa, and once a guy asked both me and another South African friend what life there was like, I was stunned at how different our views of it was. It was obviously, because we had different experiences.

    – Clarissa

  3. This is interesting I remember reading something very similar but opposite in a way. I read something which applies for sales at least; most people can not remember dialogue from a past successful sale, but they can almost always recall word for word (or close to) a rejection. As I spend my workdays in sales, if have found this to be true. Looking back I can never remember the conversations which lead to a sale, but I can think of many of the rejections. I wonder if anyone else gets this, or if anyone knows what this is called.

  4. Great post Anastasia

    Making complex decisions are required more and more in the modern age. Everything is more complex and more technical and everything needs to be done fast. It is very important that we understand the possible biases that we could encounter when making crucial decisions. Definitely a large part of our decision making is based on our past experience. That is the past we actually remember or Want to remember. I actually have to make this type of decision everyday, because I play poker quite a lot. Every bets I make against someone is based on the opponent’s play style. So to avoid availability heuristic is something I need to be conscious of. For myself I keep a note book on the way I play and the winnings and losses. I wonder if you know any other strategies that can help us avoid these biases when making decisions. If there is some concrete tips that would be really helpful to us.

  5. Thanks for sharing this knowledge.

    There is no doubt that personal experiences, thoughts, and values can affect a person’s ability to make a rational decision. The problem is, not everybody has the same experiences, thoughts, and values – this means that not every decision can be compared with another with rock solid facts.

    Being a numbers and results person, I tend to demand actual figures before making decisions. At times where this is not possible, decisions become harder and harder to make. I think many of us business school brained washed students tend to be like this too 😉

    I have never heard about Availability Heuristic before – it’s a really interesting theory. On doing some more research, it seems like this is problem that’s been tackled by many. This HBR article talks about bias, and gives a checklist of questions to ask yourself to avoid making a bad decision.

    http://dailydecisionmaking.com/wp-content/uploads/2011/07/The-Big-Idea_-Before-You-Make-That-Big-Decision…-Harvard-Business-Review.pdf

    Great read!

    A

    • Sorry that link didn’t work properly.

      Here it is!

      dailydecisionmaking.com/wp-content/uploads/2011/07/The-Big-Idea_-Before-You-Make-That-Big-Decision…-Harvard-Business-Review.pdf

      -A

  6. The link doesn’t seem to be posting – I think because it’s a PDF.

    If you google “Availability Heuristic hbr” it’s the seventh result – the PDF.

    Happy reading 🙂

    A

  7. This is a great post and i agree with it 100. my decisions are usually made by past experiences especially at work because i work as a sales rep. I usually tend to ask the questions that would give me the greatest insight into the needs of the customer. It also helps to answer those customer complaints and rebuttals.

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