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An easily relatable example of Base rate fallacy:

In a Base rate fallacy, people prefer to disregard statistical and other commonly accepted facts in favour of merely fresh or recent information that they have been presented with. Consider these two examples – In one example, a Finfluencer, appears in front of a nice high-end luxury car and claims that everyone can make money and …

What is known as ‘Base Rate Investing’?

In the rapidly changing field of finance, where emotions sometimes outweigh rationality, base rate investment provides a fresh viewpoint. This method, based on the notion of the ‘base rate fallacy’, enables investors to make judgments based on broad knowledge, minimizing the potential risks of responding to particular short-term influencing information. Let us first try to …