We take decisions most of our lives based on what we think is true 'on the average'. I mean, it is sort of impossible to know everything and everyone, even if you are a supercomputer, so we decide issues based on what is 'likely'. And, more often than not, we do not or cannot take the time to discover what is really the truth.
This is especially true when it comes to people. Get to the psychologists and they tell you that there is that which you do not know about yourself. There is this whole rigmarole about what you know about yourself and others also know, what you know but others do not know, what other know and you do not know and what nobody knows! Given that, how is it even possible for you to know the other guy. So, yes, you ASSUME...and to hell with the guy who said that ASSUME means ASS-U-ME. It's fine being an ass, after all, if you are in the company of other asses. Who wants to stick out like a sore thumb?
So, yes, we work on this 'on the average' basis. What the jargon may call a baseline. Like, if you hear of two guys in a fight with one guy being the aggressor AND hear that one is a Tamilian and the other a Punjabi, who do you automatically conclude to be the likely aggressor? The same duo, one lavish wedding and one so-so wedding and if you had to match the man to the wedding, what is your match-up?
Yup, in the absence of any other information, we draw baselines on gender, community, race, profession, whatever. ALL of us, no matter our inclinations, perforce adopt some 'on the average' ideas when dealing with people, especially relative strangers.
Baselines are all good...for starters. Because you have no data to come to any other conclusion. Once you DO interact more with the person, the need is to alter your initial ideas about her to suit what you now know of her. Therein comes the problem. Confirmation bias IS a thing. So, yes, if you think a Tamilian is a 'kanjoos' and you find him spending generously, it is 'Pata nahin aaj kya ho gaya isko'. OR, in other words, his behavior is aberrant on that day. To selectively see and/or interpret behavior to suit your preconceived notion...THAT is more often than not the norm. Which is why most people NEVER change their baseline opinions about anyone, no matter how much evidence exists to the contrary.
Between generations, there IS a bigger problem. There is no real agreement on what IS the 'average' behavior. For example, in my times, Society had a strong taboo against women dressing up in anything other than 'feminine' attire. Middle class Society, especially. Which in effect meant that most parents ENFORCED that attire for fear of facing social opprobrium. To wear jeans, say, automatically indicated that the girl was a rebel or her parents were progressive BECAUSE they had to swim against the social tide. Given that, if you saw a girl in jeans, your 'on the average' assumption was that she was more likely to be outgoing, less likely to be hung up about matters of love and sex. THAT is no longer valid as the 'on the average' assumption today. Women wearing jeans has become so normal that it takes no rebellious nature to spur it. So, the old, who still operate on a dated baseline, tend to make judgments which are no longer in sync with the current world.
A country like India, with widely disparate social mores across states and across the rural-urban divide, has people who operate on such widely varying 'on the average' assumptions about other people that it boggles the mind. No wonder people have such strange and such varying ideas about what sort of people others are!
At the end of the day, none of us can escape having to deal with people based on our own ideas of 'on the average' behavior. The trick is to always remember that it is JUST the first-cut analysis and that you should be willing to modify it till it approximates what the other person really is like.
Otherwise, it will be like the elephant which drowned on account of choosing to cross a river because the average depth of the river made it seem safe!