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PRIMACY & RECENCY EFFECT

The serial position effect is a psychological phenomenon associated with memory that says that items at the beginning (primacy) and items at the end (recency) of a list or string of information are more easily recalled than items in the middle

For example: Consider the number of people who say they are reluctant to fly in the days following news of a plane crash. The probability of a similar crash in the future has not changed, but the perception of the riskiness of flying has changed due to recent events.

This bias can also be witnessed after dramatic fluctuations in the markets—after which investors perceive stock market investing as “more risky” than prior to a fluctuation.

A video from IDFC Mutual Fund explains this

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