Which of the Following Best Describes the Base Rate Fallacy

question 20

Multiple Choice

Which of the following best describes the base rate fallacy?

• A) the tendency to treat chance events as though they have a built-in, evening-out mechanism
• B) the tendency of people to continue to believe that something is true even when it is revealed to be false or has been disproved
• C) the tendency to infer an unwarranted causal relationship between two events that are unrelated
• D) the tendency of people to discount valid information and choose to concentrate on other information

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Definitions:

PHStat

A software program that enhances Microsoft Excel with the capability to perform statistical analysis.

Variance

A measure of the dispersion of a set of data points around their mean, indicating how spread out the data points are.

Index Fund

A type of mutual fund or exchange-traded fund designed to replicate the performance of a specific market index.

PHStat

An Excel add-in that allows users to perform statistical analysis.