Base rate fallacy
The base rate fallacy, also called base rate neglect, is a logical fallacy that occurs when irrelevant information is used to make a probability judgment, especially when empirical statistics about the probability are available (called the "base rate" or "prior probability").
In some experiments, students were asked to estimate the Grade Point Averages of hypothetical students. When given relevant statistics about GPA distribution, students tended to ignore it if given descriptive information about the particular student, even if the new information did not seem to have anything to do with school performance.
This finding has been used to argue that interviews are an unnecessary part of the college admissions process because empirical evidence shows that interviewers are unable to pick successful candidates better than basic statistics. Joined by some economists, it is argued that stock market brokers similarly commit this mistake because market performance and the performance of any individual stock is indistinguishable from chance movement, and professionally-chosen portfolios do no better than those composed of stocks picked at random.
Psychologists Daniel Kahneman and Amos Tversky attempted to explain this finding in terms of the representativeness heuristic.
Richard Nisbett has argued that some attributional biases like the fundamental attribution error are instances of the base rate fallacy: people underutilize "consensus information" (the "base rate") about how others behaved in similar situations and instead prefer simpler misleading vividness.
References
- Bar-Hillel, M. (1980). The base-rate fallacy in probability judgments. Acta Psychologica, 44, 211-233.
- Kahneman, D., & Tversky, A. (1973). On the psychology of prediction. Psychological Review, 80, 237-251. ()
- Nisbett, R. E., Borgida, E., Crandall, R., & Reed, H. (1976). Popular induction: Information is not always informative. In J. S. Carroll & J. W. Payne (Eds.), Cognition and social behavior, 2, 227-236.
