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Behavioral Finance: Difference between Representative Bias and HindSight bias

Please help me understand Representative bias and also the difference between Representative Bias and HindSight bias
I am getting very confused in these 2 biases.


@Alta12,@vincentt,@sophie,@jwa,@marc

Comments

  • @RaviVooda I also find representativeness a bit confusing. Some good comments above, and I think it's also worth remembering that (from my understanding) representativeness is about classifying new information with simple heuristics, while hindsight bias is to do with faulty processing of past results/information.
    RaviVooda
  • @Jwa very true. I still find them confusing. As far as I understood, representative bias is giving too much emphasis on current information and ignoring past data. And also we classify information based on our past experiences.

    How would you differenciate Hindsight and availabilty bias? Both of them are actually interpreted based on past data. While hindsight I understand it as we classify current decisions based on our past experience be it good or bad. And availability bias as how fast it comes to memory.

    Both of them appear same to me.

    @AjFinance‌ ,@vincentt,@alta12 ,@jwa
  • Hindsight Bias - this is a cognitive bias belief perseverance whereas Availability bias is a cognitive bias based on information processing.

    In availability bias, you decide based on whatever that comes to mind first or whatever you manage to first obtain. I would say this is somehow similar to framing bias in a way or too (sorry didn't mean to confuse you further lol).

    Basically, you based your data on a narrowed range of reference.


    As for hindsight bias it's to do with how you believe that your initial decision was 'correct', even though they were not.








    RaviVooda
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