Confirmation Bias – real estate prices are always on the rise Availability Bias -
The Giant Pool of Money displayed many different types of biases on various levels. Two that particularly came to my mind was availability bias and XXX. Availability bias states that you are bias to an idea since the only data available supports the idea. The buyers of houses in that period of time were looking at the short term real estate and the common knowledge that investing in real estate is as good as it gets. The house prices were on the rise and many traditional home owners attempted their dreams of becoming a real estate tycoon. Although some buyers might have lived through the recessions in the 70’s, they never experienced it as a consumer and so only seeing housing prices go higher and higher, the idea of owning a home for the long run was embedded as a sure money maker. The last recession was more than 40 years ago and people don’t remember it because all of them were yet to be born or they were just too young. This is the case with all of the players in The Giant Pool of Money. Jim Finkel, Rachard the marine, Clarence Nathan, Adam Davidson, Ceyla Pazarbasioglu, Mike Francis, Mike Gardner, Glen Pizzolorusso, and Tonko Gast. I can’t blame any of them for falling in to Availability Bias because I too fell for it. Luckily, I bought a house that I could afford, unfortunately many of my neighbors did not. I was born in 1978 and this was my first opportunity of making a large investment for myself. Because I was bit weary, I asked a lot older mentors and family members if I should buy a home and not a single person said no. All of my friends had houses 2000sq ft or bigger houses for themselves! I couldn’t think of one reason why I shouldn’t buy a house and I’m sure many Americans felt the same and I was amazed how easy the entire process was! Like Richard the marine, I had the ability to lock in a 30 year fixed Veterans Administration loan but my lender opted...
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