Base Rate Fallacy

Posted in Statistics, Total Reads: 813

Definition: Base Rate Fallacy

A base rate fallacy is committed when a person judges an outcome without considering prior knowledge of the probability that it will occur. They focus is on other information that isn't relevant.

For instance, if Ravi shows a bag of 250 cards with equal numbers in 5 different colours. Then, Ravi asksShyam what the probability is that he will pick a green one while Shyam’s eyes are closed? Ravi also tells Shyam that green cards are hisfavorite and yesterday he picked out twice as many green cards than red ones.

If Shyam ignored the fact that there are 50 cards of each colour, and instead focused on the fact that Ravi picked out twice as many green cards than red yesterday, then Shyam has committed a base rate fallacy because what Ravi did yesterday is irrelevant information.


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