The Base Rate Fallacy, also known as the Base Rate Neglect, is an error in reasoning that occurs when an individual neglects the base rate of a given phenomenon and focuses solely on the information presented to them. This fallacy is a cognitive bias in which individuals ignore the general population and focus only on the specific information they have been presented with (Gigerenzer & Hoffrage, 1995). This type of thinking is a common cause of incorrect decisions, as it fails to consider the larger context in which the decision is being made (Gigerenzer, 2004).
The Base Rate Fallacy occurs when individuals fail to take into account the base rate of a situation or phenomenon when making a decision. For example, if an individual is presented with a case of a person who is described as being a bank teller, they may assume that the person is more likely to be an honest person than a dishonest person. However, if the individual fails to take into account the base rate of dishonesty among bank tellers, they may be making an incorrect decision. The base rate of dishonesty among bank tellers may be higher than the general population, meaning that the individual may be making a decision based on incorrect information.
To illustrate this concept, consider a study conducted by Gigerenzer and Hoffrage (1995). In this study, participants were asked to make a decision about a hypothetical medical case. Participants were presented with a description of a patient and were asked to decide whether or not the patient had a particular disease. The description of the patient included information about the patient’s symptoms, as well as the base rate of the disease in the general population. The results of the study showed that participants who failed to take the base rate of the disease into account when making their decision were more likely to make incorrect decisions than those who did take the base rate into account.
The Base Rate Fallacy is an important concept to consider when making decisions, as it can lead to incorrect decisions if not taken into account. It is important to consider not only the information that is presented to us, but also the base rate of the situation or phenomenon when making decisions.
References
Gigerenzer, G. (2004). Fast and frugal heuristics: The adaptive toolbox. In D. J. Koehler & N. Harvey (Eds.), Blackwell handbook of judgment and decision making (pp. 62-88). Oxford, UK: Blackwell.
Gigerenzer, G., & Hoffrage, U. (1995). How to improve Bayesian reasoning without instruction: Frequency formats. Psychological Review, 102(4), 684-704.