Following the schedule of our Reading Calendar
The idea behind this chapter is really simple. It explains an experiment and two biases that can be inferred by the way subjects behave in the experiment.
When we humans are trying to assign a possibility of something (the guy that lives across the corridor) being part of an abstract class (a law student) we forget about the a priory probabilities of that abstract class (how frequent are law students) and take into account mostly the resemblance of our something (the neighbour) to the stereotype of our abstract class (how law students look like). That means that we are not processing correctly Bayesian statistics. And that we humans are lousy innate statisticians is something that has been talked about extensively along the book.
The second bias that the experiment illustrates is the fact that we do not take into account the level of reliability of information when using it.
I am beginning to feel uneasy about the book. This is just an intuition, but I don’t feel happy with deducing that much from this kind of experiments. They are so far away from real life. I feel (and again only feel) that a more robust and empirical approach can be provided by marketing research. There must be (I don’t know the field) dozens of books talking about price setting and how to take advantage of anchor effects.