Bias 17: Local Representativeness Bias
We hired this girl two months ago and she has already been sick three times.
What do you conclude?
- She has a fragile nature
- She will often be sick
Local representativeness (Tversky and Kahneman, 1971) implies that we rely on the average of our own limited experiences to estimate the expected value of a phenomena, while it would require much more data to be accurate.
She is always sick and has a fragile nature, though it can be only by chance that this girl has been sick three times in two months and that it has never happened before and will never happen again.
Busenitz, L. W., & Barney, J. B. (1997). Differences between entrepreneurs and managers in large organizations: Biases and heuristics in strategic decision-making. Journal of business venturing, 12(1), 9-30.