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Behavioral Finance

Base Rate Fallacy

Also called: base rate neglect, ignoring priors

The base rate fallacy is ignoring how common something is in general when judging a specific case. A vivid story about a startup founder overwhelms the fact that most startups fail. It's the everyday failure Bayes' theorem corrects, and the discipline that fixes it is asking the outside-view question first: of all cases like this one, what fraction ended well?

Where this is taught

Definitions are the trailer. These free levels turn Base Rate Fallacy into something you play — one bite-size lesson, with worked examples, a quiz and XP.

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