Asked by Denia Martinez on Jul 24, 2024
Verified
The law of small numbers refers to:
A) the tendency for events with the same likelihood of occurrence to even out , given enough trials.
B) a tendency to take unnecessary risks without full information.
C) the tendency to overstate the probability of an event when faced with little information.
D) the tendency to ignore events that have a small likelihood of occurrence.
Law of Small Numbers
A cognitive bias that leads people to make unjustified conclusions based on limited data.
Risks
The potential for losing something of value, or the uncertainty regarding the outcome of an action or decision.
Probability
The likelihood or chance of an event occurring, often expressed as a number between 0 and 1.
- Comprehend the common biases that influence consumer decisions and the function of anchoring.
Verified Answer
VV
Villan VaranJul 25, 2024
Final Answer :
C
Explanation :
The law of small numbers refers to the cognitive bias where people overestimate the probability of something happening based on a small amount of evidence. This is because they incorrectly assume that small samples will be representative of the larger population, leading to overgeneralizations from limited data.
Learning Objectives
- Comprehend the common biases that influence consumer decisions and the function of anchoring.