What type of reasoning is indicative of representative bias?

Representative bias occurs when individuals classify new information based on how closely it resembles their prior experiences or existing stereotypes. This cognitive bias leads people to make judgments and decisions that may not be appropriate given the new context, focusing instead on how similar an outcome appears to past outcomes.

In the context of question, the classification of new information based on previous experiences aligns perfectly with representative bias. For instance, if an investor encounters a stock that resembles another previously successful stock they invested in, they may mistakenly assume that the new stock will also perform well, disregarding any fundamental differences or unique risks.

Other options describe more analytical approaches to reasoning, such as using statistical reasoning based on large samples, which relies on data and objective analysis rather than subjective comparisons. Building hypotheses from a broad range of evidence implies a comprehensive and critical examination of various factors, while independent analysis of each investment opportunity reflects a careful and deliberate consideration of unique individual cases. All of these approaches stand in contrast to the tendency of representative bias to oversimplify and make assumptions based on familiar characteristics.