10 lines
936 B
Markdown
10 lines
936 B
Markdown
# Survivorship Bias
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In finance *survivorship bias* is a logical error of over analysing people or investments that have been artificially selected by a selection process and overlooking the broader space of entities that do not, typically because of their lack of visibility.
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This is typically common in investing where select wins on specific investments are over analysed and broader losses are ignored.
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For example a basket of tech stocks picked randomly during the height of the dotcom bubble would have performed very poorly on the time scale of the next decade and most simply ceased to exist. However a select few stocks (Google, Amazon, etc) outperformed the market. It would therefore be a fallacy to assume that the average dotcom tech stock outperformed the market because most did not survive long enough to sample.
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See also [endowment effect](endowment-effect.md) and [bandwagon bias](bandwagon-bias.md).
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## References |