Availability heuristic.
In plain English
The availability heuristic is a mental shortcut where you estimate how likely or frequent something is by how easily examples spring to mind. Tversky and Kahneman described it in 1973: events that are recent, vivid, or heavily covered feel more probable than they really are. With money, it means a friend's crypto win or a scary market headline can loom larger in your thinking than the dull, more common outcome, nudging you toward chasing a hot story or fleeing a normal dip.
01Why it matters
Financial decisions get distorted when the easy-to-recall example is not the typical one, so the availability heuristic can push people into a trendy bet or out of a sound plan based on what is memorable rather than what is likely.
02The math, step by step
After a run of headlines about one stock soaring, that outcome is easy to picture, so it feels common and within reach. The far more frequent result, a pick that just tracks the market or lags it, makes no headlines, so it stays out of mind and out of the estimate.
03What this is NOT
It is not just recall. The bias is using ease of recall as a stand-in for probability. Remembering a dramatic event is normal; treating it as representative of how often such things happen is the error.
04Receipts
Every figure on this page is sourced to a primary document. Tap to open the original.
Plain-English answers from our glossary. Receipts included. Never advice.
Educational tool. Answers come only from ClearMoneySchool's published glossary and are not advice. Why we never give advice