Which of the following is a result of availability bias?

The choice highlighting the increased likelihood of selecting investments based on recent news reflects a key characteristic of availability bias. This cognitive bias occurs when individuals rely on immediate examples that come to mind when evaluating a situation or making decisions. In the context of investing, this often means that investors may place disproportionate importance on information that has been recently reported or is highly visible, such as financial news or recent performance data, leading them to make investment choices influenced by the most readily available information rather than a comprehensive analysis of all relevant data.

For instance, if an investor hears about a particular stock in the news due to recent developments—such as a product launch or scandal—they may be more inclined to buy or sell that stock based on its recent public visibility, rather than considering its overall fundamentals or long-term prospects. This behavior can lead to poor investment decisions, as the recent news may not accurately reflect the underlying value or long-term trends associated with the investment.

The other options are less aligned with the concept of availability bias since extreme diversification of investment portfolios, regular assessment of long-term market trends, and greater reliance on quantitative analysis methods typically suggest a more systematic or analytical approach to investing, rather than one that is swayed by immediate information.