Availability Error

Most important human judgments are made under conditions of uncertainty. We use heuristics, or rules of thumb, to guide us in such instances as we try to determine what belief or action has the highest probability of being the correct one in a given situation. These rules of thumb are often instinctive and irrational. Social psychologists such as Thomas Gilovich, Daniel Kahneman, and Amos Tversky have studied several important heuristics and discovered errors associated with their use. One of these heuristics is the availability heuristic, determining probability "by the ease with which relevant examples come to mind" (Groopman 2007: p. 64) or "by the first thing that comes to mind" (Sutherland 1992: p. 11).

The problem with the availability heuristic is that what is available at any given time is often determined by factors that lead to an irrational or erroneous decision. Dr. Jerome Groopman gives the example of a doctor who had treated "scores of patients" over a period of several weeks with "a nasty virus" causing viral pneumonia. Then a patient presented herself with similar symptoms except that her chest x-ray "did not show the characteristic white streaks of viral pneumonia." The doctor diagnosed her as being in the early stages of the illness. He was wrong. Another doctor diagnosed her correctly as suffering from aspirin toxicity. The diagnosis of viral pneumonia was available because of the recent experience of many cases of the illness. Had his recent experience not included so many cases of viral pneumonia it is likely the doctor would have made the right diagnosis. After he realized his mistake, he said "it was an absolutely classic case--the rapid breathing, the shift in her blood electrolytes--and I missed it. I got cavalier."

The stock market is another place where the availability error exemplifies itself. Most people wouldn't think of buying a stock that has recently fallen in value, yet a good way to make money in the market is to buy low and sell high. (It's not the only way, of course. You can make money by earning dividends and holding on to a good stock for a long time or you can do it the way Martha Stewart did with insider information.) Yet, most people will only consider buying a stock if it's doing well, i.e., at a high value. Some people, apparently, buy stock on the advice of their hairdresser or of a stranger who sent them an email. The advice is concrete and readily available, but probably wrong.

http://www.skepdic.com/availability.html