Illusory correlation refers to the perception of a relationship between two variables when in fact no such relationship exists. This phenomenon can occur when people observe a small number of events or instances and draw conclusions about the underlying relationship between the variables, without considering a larger, more representative sample.

One key factor contributing to illusory correlation is the availability heuristic, in which people are more likely to rely on information that is easily accessible or immediately present to them. This can lead to a bias towards information that confirms preexisting beliefs or assumptions, rather than considering a more diverse range of evidence.

Another factor contributing to illusory correlation is the confirmation bias, in which people actively seek out information that confirms their beliefs, while ignoring or dismissing evidence that challenges them. This can lead to a self-reinforcing cycle, in which people continue to believe in the relationship between the variables even in the face of contradictory evidence.

Illusory correlation can have significant consequences, particularly in fields such as psychology, economics, and social science, where people rely on statistical analysis to draw conclusions about relationships between variables. It can lead to flawed research conclusions, misguided policy decisions, and even harmful stereotypes.