# Base Rate Fallacy

*Behavioral Finance — Finicade finance glossary*

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?

**Also known as:** base rate neglect, ignoring priors

**Related terms:** [Bayes' Theorem](https://finicade.com/glossary/bayes-theorem), [Availability Heuristic](https://finicade.com/glossary/availability-heuristic), [Conditional Probability](https://finicade.com/glossary/conditional-probability), [Narrative Fallacy](https://finicade.com/glossary/narrative-fallacy), [Power Law](https://finicade.com/glossary/power-law)

**Taught in:** Mind Over Markets — Representativeness & Base Rates

Source: https://finicade.com/glossary/base-rate-fallacy