Which cognitive bias deals with the influence of prior knowledge on current interpretation?

The conservatism bias is the cognitive bias that refers to the tendency of individuals to favor their prior beliefs and knowledge when interpreting new information. When individuals display conservatism bias, they are often slow to incorporate new evidence into their existing viewpoints or forecasts. This bias can lead to an underreaction to new information, as people may weigh their past experiences and prior knowledge more heavily than current data or trends.

In the context of financial analysis, conservatism bias can affect investment decisions and market predictions, as investors may hesitate to adjust their expectations or strategies in light of new, conflicting information. This can perpetuate outdated beliefs and create inefficiencies in market pricing.

Other cognitive biases may relate to how individuals perceive control, process information, or reflect on past events, but conservatism bias specifically addresses the role of prior knowledge and beliefs in shaping current interpretations.