Dominance of Individuating Information and Neglect of Base Rates in Probability Estimation

Abstract : According to the normative theory of prediction, prior probabilities (base rates) which summarize what we know before receiving any specific evidence, should remain relevant even after such evidence is obtained. In the present study, subjects were asked to estimate the probability that one of two states was true on the basis of (a) information about the prior probabilities of the states and (b) individuating information, specific to the case at hand and known to be accurate with probability p. Subjects' responses were determined predominantly by the specific evidence; the prior probabilities were neglected, causing the judgments to deviate markedly from the normative response. Theoretical and practical implications of this result are discussed.