With Regard to the Use of Base Rate Information, the Evidence

question 127

Multiple Choice

With regard to the use of base rate information, the evidence suggests that people __________.

• A) totally disregard base rate information and rely only on the similarity of information to a category
• B) are very astute at using base rate information
• C) focus too much on individual characteristics and insufficiently on base rates
• D) focus equally on individual characteristics and base rate information

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Definitions:

Amortized Cost

The accounting method that gradually reduces the book value of an intangible or tangible asset through periodic charges to income.

IFRS

International Financial Reporting Standards (IFRS) are a set of accounting standards developed by the International Accounting Standards Board (IASB) that outline how financial statements should be prepared and disclosed.

Straight-Line Depreciation

A method of calculating the depreciation of an asset which allocates an equal portion of the asset's cost over each year of its useful life.

Useful Lives

The estimated period during which an asset is expected to be usable for the purpose for which it was acquired.