1 CREI (Universitat Pompeu Fabra) and Harvard University, respectively. We are deeply grateful to Josh

We present a model of intuitive inference, called “local thinking, ” in which an agent combines data received from the external world with information retrieved from memory to evaluate a hypothesis. In this model, selected and limited recall of information follows a version of the respresentativeness heuristic. The model can account for some of the evidence on judgment biases, including conjunction and disjunction fallacies, but also for several anomalies related to demand for insurance. Key words: local thinking, representativeness, stereotypes, insuranc