What role does cognitive bias play in interpreting probabilities?
Cognitive biases significantly distort how individuals interpret probabilities. For instance, people may overestimate the likelihood of rare events due to the availability heuristic, where they judge the probability of an event based on how easily examples come to mind. This can lead to irrational fears or overreactions to events that are statistically unlikely, such as plane crashes or shark attacks, while underestimating more common risks like heart disease.
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