Availability Heuristic Will Affect Decision-making and Result in Bias

Abstract

Heuristic is a strategy that allows us to make decision without complicate information gathering and analyzing. Availability heuristic is a type of heuristic that concentrates on retrieving information from memory. However, there are four factors that may induce bias from the use of availability heuristic. A model will be established in this paper to assess the possibility of bias occurring in decision under availability heuristic. The existence of availability heuristic is also against the traditional financial market assumption.