Availability Bias
The tendency to judge probability by how easily examples come to mind rather than by actual frequency.
How it is identified
Test: perceived likelihood tracks the vividness and recency of remembered examples rather than base rates
Unit
qualitative
In depth
Vivid, recent and heavily reported events feel more likely than they are, which is why perceived risk spikes after a crash and evaporates during a long calm. Media coverage is the main amplifier, since coverage tracks drama rather than frequency — a single fraud generates more reporting than a hundred companies reporting ordinary results. In investing it makes the last crisis feel like the template for the next one and makes an obscure but real risk invisible. The countermeasure is to look up the actual frequency rather than to consult one's impression of it.
Worked example
After a well-covered accounting fraud, investors avoid the whole sector. The base rate of such frauds may be under 1% of listed companies, and the reaction is calibrated to coverage rather than to that number.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Availability Bias” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.