Judging a conjunction of two events (A and B) as more probable than one of the events alone (A), violating basic probability rules.
Investors judge 'The company will succeed AND expand internationally' as more likely than 'The company will succeed,' because the detailed scenario is more representative of success stories, even though it's logically less probable.
More detailed scenarios are more likely—adding details always reduces probability, even when the details make the scenario more plausible or representative.
Thinking, Fast and Slow
Daniel Kahneman
Judging probability by similarity to stereotypes or prototypes, while ignoring base rates and sample size.
Judging probability by similarity to stereotypes or prototypes, while ignoring base rates and sample size.
Ignoring statistical base rates (how common something is in the population) in favor of specific case information or stereotypes.
Why is judging 'Linda is a bank teller and active in the feminist movement' as more probable than 'Linda is a bank teller' a logical error?
An investor evaluates two scenarios: (A) 'The company will succeed' versus (B) 'The company will succeed AND expand internationally.' Why might they judge B as more likely, and why is this problematic?