Recency Bias

What is it?

Recency bias is the tendency to give recent events or information more weight than earlier data when forming judgments. It arises because recent memories tend to be more vivid and easier to recall. In performance evaluations, it leads managers to overweight the last few weeks and overlook months of earlier work. In investing, recent market performance can dominate expectations, encouraging people to buy high after rallies and sell low after crashes. The bias affects hiring (emphasizing the most recent interview impressions), relationships (letting a recent conflict overshadow years of positive history), and strategic planning (extrapolating recent trends indefinitely). It is particularly costly in environments with high variability or mean reversion, where recent performance is a poor predictor of future results, and it makes it harder to learn from historical patterns. Counteracting it requires collecting data systematically over longer periods, using evaluation frameworks that force consideration of the whole period, and deliberately asking "is this recent trend representative of the longer pattern?"