(6) The program should include a modest amount of training to deal with typical errors in reasoning, such as overconfidence, bias, and base-rate neglect
. (7) The program's participants would make predictive estimates based on numeric probabilities (that is, 40 or 60 percent), rather than possible or probable estimative language.
Kahneman describes dozens of experimentally demonstrated breakdowns, such as anchoring effects, base-rate neglect
, availability cascade, illusion of validity, halo effects, framing effects, confirmation bias, availability bias, hindsight bias and others.
We discuss three examples of such research: base-rate neglect, in which people ignore critical background information in favor of less reliable case-specific information; the conjunction fallacy, in which people report that the conjunction of two events is more likely to have occurred than one of the events alone; and the sunk-cost effect, in which people are unwilling to abandon a course of action which has already incurred substantial cost.
In this paper we will briefly review our research in areas (5) through (7) above, namely base-rate neglect, the conjunction fallacy, and the sunk-cost effect.
The literature on base-rate neglect suggests that even when potentially useful information is not aversive we manage to neglect it, instead overemphasizing case-specific information.
Thus, base-rate neglect problems may be thought of as problems involving multiple stimulus control.
But if our students displayed base-rate neglect they should respond even less optimally: They should be sensitive to sample accuracy and match the sample 50% of the time, corresponding to the responses of students in the paper-and-pencil taxicab problem.
In a comparable MTS task pigeons displayed neither base-rate neglect nor even probability matching.
Ongoing research in our laboratory suggests that when pigeons are given a sufficient history of matching and are then tested in our MTS base-rate analog that they too succumb to base-rate neglect. On the other hand, human subjects may be sensitized to the importance of base rates by giving them training in which there is no case-specific information (e.g., no sample), only experience with base rates.