The Base-Rate Fallacy in Probability Judgments
Discussion Paper Series from The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem
The base-rate fallacy is people's tendency to ignore base rates in favor of, e.g., individuating information (when such is available), rather than integrate the two. This tendency has important implications for understanding judgment phenomena in many clinical, legal, and social-psychological settings. An explanation of this phenomenon is offered, according to which people order information by its perceived degree of relevance, and let high-relevance information dominate low-relevance information. Information is deemed more relevant when it relates more specifically to a judged target case. Specificity is achieved either by providing information on a smaller set than the overall population, of which the target case is a member, or when information can be coded, via causality, as information about the specific members of a given population. The base-rate fallacy is thus the result of pitting what seem to be merely coincidental, therefore low-relevance, base rates against more specific, or causal, information. A series of probabilistic inference problems is presented in which relevance was manipulated with the means described above, and the empirical results confirm the above account. In particular, base rates will be combined with other information when the two kinds of information are perceived as being equally relevant to the judged case.
Pages: 22 pages
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Persistent link: https://EconPapers.repec.org/RePEc:huj:dispap:dp732
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