Base Rate Fallacy

The Base Rate Fallacy occurs when people ignore general statistical information (base rates) in favor of specific information about an individual case. For example, if a rare disease affects 1 in 1,000 people, and a test for the disease has a high accuracy, one might overestimate the likelihood of having the disease based solely on a positive test result, without considering how rare the disease is. This leads to misjudgment, as the overall likelihood (base rate) is crucial for making informed decisions. Understanding base rates helps improve decision-making and avoid common errors in reasoning.