Confused between Availability and Anchoring bias

[blackscholesvol]

Anyone can provide clarity? I am getting mixed info from the mock exams.

In one mock, they indicated that Anchoring trap is tendency of mind to give disproportionate weight to the first information it receives on topic. I thought anchoring trap is anchored to some previous number and making adjustments to it.

And availability bias is influenced by whatever comes to mind first or recalling the first piece of information.

[pachstar]

@blackscholesvol

Anyone can provide clarity? I am getting mixed info from the mock exams.

In one mock, they indicated that Anchoring trap is tendency of mind to give disproportionate weight to the first information it receives on topic. I thought anchoring trap is anchored to some previous number and making adjustments to it.

And availability bias is influenced by whatever comes to mind first or recalling the first piece of information.

Hey blackscholesvol

This is not meant to be an undermining comment, but i’d check out the glossary for behavioural finance(Note not the actual curriculum, but the glossary at the back). I had the same issue when doing Mocks, but I find looking at the short summary in the glossary you’re able to nitpick why it’s anchoring or why its availability, or why it should be representativeness over conservatism. Sometimes the only difference is in a few words in the case, so i totally understand how frustrating this can be.

Another tip would be, and this doesn’t always work, identify whether the two bias’ you are debating about is emotional or cognitive (and further if its info processing or believe perseverance) and then look for indicators in the case that point you in the right direction.

Check out the glossary though, I think it’d really help.

[blackscholesvol]

Thanks, apparently availability trap is not covered in the curriculum but showed up in the Mock exam. Prudence trap also isn’t in the curriculum.

The glossary helps and I like your suggestion to separate between emotional and cognitive

[Batman1]

@blackscholesvol

Thanks, apparently availability trap is not covered in the curriculum but showed up in the Mock exam. Prudence trap also isn’t in the curriculum.

The glossary helps and I like your suggestion to separate between emotional and cognitive

These are both in the curriculum in book 3, economics section.

[pachstar]

@blackscholesvol

Anyone can provide clarity? I am getting mixed info from the mock exams.

In one mock, they indicated that Anchoring trap is tendency of mind to give disproportionate weight to the first information it receives on topic. I thought anchoring trap is anchored to some previous number and making adjustments to it.

And availability bias is influenced by whatever comes to mind first or recalling the first piece of information.

Hey BlackScholes, Didnt have my books with me yesterday, have them now made a mental note to get back to you. Here are the terms from the glossary like I mentioned

Availability bias: An information-processing bias in which people take a heuristic approach to estimating the probability of an outcome based on how easily the outcome comes to mind.

Anchoring and adjustment: An information-processing bias in which the use of a psychological heuristic influences the way people estimate probabilities. Anchoring and adjustment bias : An information-processing bias in which the use of a psychological heuristic nfluences the way people estimate probabilities. Anchoring trap: The tendency of the mind to give disproportionate weight to the first information it receives on a topic.