What is the primary misunderstanding illustrated by the conjunction fallacy?

The conjunction fallacy occurs when people mistakenly believe that specific conditions are more probable than a single general one. This fallacy often arises in scenarios presented through the lens of representative heuristics, where individuals assess the probability of a conjunction of two events as being more likely than the occurrence of one of the events alone.

In the context of the question, the conjunction fallacy demonstrates how people overestimate the likelihood of a specific scenario — particularly when it appears more detailed or representative — even though, according to probability theory, the likelihood of two events occurring together (the conjunction) cannot be greater than the likelihood of either event occurring separately. This reflects an inclination to find more plausible narratives in scenarios that are richer in detail, leading to the overestimation of composite events.

So, option C accurately captures the essence of the conjunction fallacy, highlighting the crucial aspect of overestimation regarding specific events rather than general occurrences.