Recency bias is a cognitive bias that causes people to overweight recent information and events when making decisions or forming opinions. It is the tendency to place too much importance on recent experiences and ignore the information and events that came before them. It can be thought of as the time dimension of the [[Availability Bias]] which relates to the overweighting of easily accessible information. In this case, recent information is more readily accessible and overweighted. For example, if an investor has recently seen the stock market go up, they may have a more positive view of the market and be more likely to invest, even if the long-term trend is downward. Similarly, if someone has just witnessed a winning streak by a sports team, they may believe that the team is better than it actually is, and overestimate their chances of winning in the future. Overconfidence resulting from recency bias can make us more prone to the incorrect [[Fielding Outcomes|fielding of outcomes]]. Recency bias can have a significant impact on [[Decision-Making]] and can lead to poor choices and outcomes. It can cause people to overlook important information and focus instead on recent or easily accessible information. Just like the availability bias can also manifest itself when information is *unavailable*, the lack of recent and relevant information can lead us to drawing inferences that have no basis in reality. Kahneman calls this effect substitution which is the operation of answering one question in place of another. If we are faced with a difficult question our minds work to answering a different, easier question in place of the original question. **Case Studies:** - [[CHG Issue 163 Reframing the Bond Market]] - [[CHG Issue 97 Recency Bias]] Explore Further: [[Berkson's Paradox]] | [[Simpson's Paradox]] Tags: #seeds Your support for Cedars Hill Group is greatly appreciated <form action="https://www.paypal.com/donate" method="post" target="_top"> <input type="hidden" name="hosted_button_id" value="74PGN8ZXHQVHS" /> <input type="image" src="https://www.paypalobjects.com/en_US/i/btn/btn_donate_LG.gif" border="0" name="submit" title="PayPal - The safer, easier way to pay online!" alt="Donate with PayPal button" /> <img alt="" border="0" src="https://www.paypal.com/en_US/i/scr/pixel.gif" width="1" height="1" /> </form>