An availability cascade is a self-reinforcing cycle that explains the development of certain kinds of collective beliefs. A novel idea or insight, usually one that seems to explain a complex process in a simple or straightforward manner, gains rapid currency in the popular discourse by its very simplicity and by its apparent insightfulness. Its rising popularity triggers a chain reaction within the social network: individuals adopt the new insight because other people within the network have adopted it, and on its face it seems plausible. The reason for this increased use and popularity of the new idea involves both the availability of the previously obscure term or idea, and the need of individuals using the term or idea to appear to be current with the stated beliefs and ideas of others, regardless of whether they in fact fully believe in the idea that they are expressing. Their need for social acceptance, and the apparent sophistication of the new insight, overwhelm their critical thinking.

The idea of the availability cascade was first developed by Timur Kuran and Cass Sunstein as a variation of information cascades mediated by the availability heuristic, with the addition of reputational cascades. The availability cascade concept has been highly influential in finance theory and regulatory research, particular with respect to assessing and regulating risk.

Availability cascades occur in a society via public discourse (e.g. the public sphere and the news media) or over social networks—sets of linked actors in one or more of several roles. These actors process incoming information to form their private beliefs according to various rules, both rational and semi-rational. The semi-rational rules include the heuristics, in particular the availability heuristic. The actors then behave and express their public beliefs according to self-interest, which might cause their publicly expressed beliefs to deviate from their privately held beliefs.

Kuran and Sunstein emphasize the role of availability entrepreneurs, agents willing to invest resources into promoting a belief in order to derive some personal benefit. Other availability entrepreneurs with opposing interests may wage availability counter-campaigns. Other key roles include journalists and politicians, both of which are subject to economic and reputational pressures, the former in competition in the media, the latter for political status. As resources (e.g. attention and money) are limited, beliefs compete with one another in the "availability market". A given incident and subsequent availability campaign may succeed in raising the availability of one issue at the expense of other issues.

Dual process theory posits that human reasoning is divided into two systems, often called System 1 and System 2. System 1 is automatic and unconscious; other terms used for it include the implicit system, the experiential system, the associative system, and the heuristic system. System 2 is evolutionarily recent and specific to humans, performing the more slow and sequential thinking. It is also known as the explicit system, the rule-based system, the rational system, or the analytic system. In The Happiness Hypothesis, Jonathan Haidt refers to System 1 and System 2 as the elephant and the rider: while human beings incorporate reason into their beliefs, whether via direct use of facts and logic or their application as a test to hypotheses formed by other means, it is the elephant that is really in charge.

Heuristics are simple, efficient rules which people often use to form judgments and make decisions. They are mental shortcuts that replace a complex problem with a simpler one. These rules work well under most circumstances, but they can lead to systematic deviations from logic, probability or rational choice theory. The resulting errors are called "cognitive biases" and many different types have been documented. These have been shown to affect people's choices in situations like valuing a house or deciding the outcome of a legal case. Heuristics usually govern automatic, intuitive judgments but can also be used as deliberate mental strategies when working from limited information. While seemingly irrational, the cognitive biases may be interpreted as the result of bounded rationality, with human beings making decisions while economizing time and effort.

Kuran and Sunstein describe the availability heuristic as more fundamental than the other heuristics: besides being important in its own right, it enables and amplifies the others, including framing, representativeness, anchoring, and reference points.

Even educated human beings are notoriously poor at thinking statistically. The availability heuristic, first identified by Daniel Kahneman and Amos Tversky, is a mental shortcut that occurs when people judge the probability of events by how easy it is to think of examples. The availability heuristic operates on the notion that, "if you can think of it, it must be important." Availability can be influenced by the emotional power of examples and by their perceived frequency; while personal, first-hand incidents are more available than those that happened to others, availability can be skewed by the media. In his book Thinking, Fast and Slow, Kahneman cites the examples of celebrity divorces and airplane crashes; both are more often reported by the media, and thus tend to be exaggerated in perceived frequency.