When People Commit the Base-Rate Fallacy, They Often

question 96

Multiple Choice

When people commit the base-rate fallacy, they often

• A) rely too heavily on the availability heuristic.
• B) believe that the conjunction of two events is more likely than either event by itself.
• C) pay too little attention to information about relative frequency.
• D) are especially likely to demonstrate the hindsight bias.

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Definitions:

Net Income

The total earnings a company makes after all expenses and taxes have been deducted from revenue.

Stockholders' Equity

Stockholders' equity represents the residual interest in the assets of a corporation after deducting its liabilities, essentially the net worth attributable to shareholders.

Note Payable

A legal obligation representing a loan or promissory note that requires the borrower to repay the lender a certain amount of money at a future date or on demand.

Cash Payment

A transaction in which money is paid immediately at the time of purchase, not on credit.