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Cognitive Bias: Conjunction Fallacy

You work for an international clothing company.

Next year, you will launch a new pink child dress with a large tag “Ti amo” on its front.

Who do you think is the most likely buyer of this pink child dress?

  1. A father
  2. A mother
  3. An Italian mother

Some people may be tempted to answer that the most likely buyer is an Italian mother. Our brain has immediately the cliché of a caring Italian mother buying a dress for her little girl.

However, the real answer is counter-intuitive since the fact to be an Italian mother… implies that you are a mother. The probability to be a mother is higher in absolute than being an Italian mother.

In mathematical terms, the set of being an ”Italian mother” is included in the set of being a ”mother” so that we have necessarily P(”Italian mother”)<P(”Mother”).

The probability of the event 2 is thus often higher than the probability of the event 3.

This common bias is called conjunction fallacy and can affect our investment decisions as well.

Reference
Bar- Hillel, M. (1980). The base-rate fallacy in probability judgments. Acta Psychologica, 44(3), 211-233.

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