reading 8: EOC about Gerber "Availability bias"

CFA Level III Portfolio Management
#1

CFAI EOC chapter 8, page 105:

In the CFAI book, the answers show 2 ways to highlight the ‘availability bias’:

  • Although Gerber felt the foundation’s investment in ABC was high, he decided that Ludwigs’ involvement and their past success justified the investment in ABC. The information on the past success of Ludwigs’ investments came easily to mind.
  • Gerber believed 100 percent of the foundation’s portfolio in the health care industry was appropriate, most likely because of his past experience as an analyst in the industry. It is easier for Gerber to recall information from his past than to develop a diversified investment portfolio. Investors who exhibit availability bias may limit their investment opportunity set, may choose an investment without doing a thorough analysis of the stock, may fail to diversify, and may not achieve an appropriate asset allocation. Gerber exhibits all of these tendencies when he is evaluating the foundation’s portfolio.

To me, those 2 points are more relevant for ‘conservatism bias’ or ‘status quo’. I understand that Behavioral topics can be subjective.

Any thought?

#2

In general, most people suffer from multiple biases, some biases more deep than others. In this case, it is clearly talking about availability bias. Conservatism or status quo bias would be chosen in case Gerber decided to maintain his current position even facing new information regarding health care industry.