Why Is the Concept of Base Rate Important in Decisions

question 54

Multiple Choice

Why is the concept of base rate important in decisions that involve the representativeness heuristic?

• A) People usually don't pay enough attention to base rate when making these decisions.
• B) People are so aware of information about base rate that they typically make accurate decisions.
• C) People rarely make the small-sample fallacy when making these decisions.
• D) When people have a background in statistics, they are much more likely to make correct decisions on tasks involving the representativeness heuristic.

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Definitions:

Excellent Customer Service

High-quality support and service provided to customers, focusing on meeting their needs and ensuring their satisfaction.

Macro Strategy

High-level approaches and objectives focused on overall goals and financial performance of an organization or economy.

Operational Excellence

Involves a firm’s focus on efficient operations and excellent supply chain management.

Market Share

The percentage of an industry's sales that a particular company secures over a specific time period.