Representative bias is primarily characterized by which of the following?

Representative bias is primarily characterized by the tendency to overemphasize new information while underestimating or disregarding base rates, which are prior probabilities or statistics regarding a subject. This bias occurs when individuals make judgments based on how representative an event or outcome appears, rather than considering all available statistical information.

For instance, if an investor learns about a new company's rapid growth, they might assume it will continue to perform excellently based on this recent trend. In doing so, they may ignore the broader industry context or past performance trends (the base rates) that could suggest otherwise. This cognitive distortion can lead to flawed decision-making, particularly in areas where understanding the overall context and historical data is critical.

In contrast, the other options present reasoning that either reflects ideal decision-making (like thorough analysis or employing statistical reasoning) or disregard past information altogether, which does not align with the essence of representative bias. This reinforcing understanding highlights how prevalent biases in judgment can distort perceptions and lead to suboptimal choices, especially in finance and investing.