Judging probability by similarity to stereotypes or prototypes, while ignoring base rates and sample size.
Investors see a company with charismatic leadership and innovative products, judge it similar to past success stories like Apple, and overestimate its probability of success while ignoring base rates (most startups fail).
If something matches a pattern or stereotype, it's probably true—similarity to a prototype doesn't determine probability.
Thinking, Fast and Slow
Daniel Kahneman
Ignoring statistical base rates (how common something is in the population) in favor of specific case information or stereotypes.
Judging a conjunction of two events (A and B) as more probable than one of the events alone (A), violating basic probability rules.
Fast, automatic, unconscious cognitive processing that operates through pattern recognition and associative memory without deliberate effort.
Ignoring statistical base rates (how common something is in the population) in favor of specific case information or stereotypes.
Judging a conjunction of two events (A and B) as more probable than one of the events alone (A), violating basic probability rules.
In the famous Linda problem, why do people judge 'feminist bank teller' as more probable than 'bank teller'?
An investor sees a startup with charismatic founders, innovative technology, and a compelling vision. How might the representativeness heuristic lead to a poor investment decision?