The effects of base rate neglect on sequential belief updating and real-world beliefs.

Base-rate neglect is a pervasive bias in judgment that is conceptualized as underweighting of prior information and can have serious consequences in real-world scenarios. This bias is thought to reflect variability in inferential processes but empirical support for a cohesive theory of base-rate neglect with sufficient explanatory power to account for longer-term and real-world beliefs is lacking. A Bayesian formalization of base-rate neglect in the context of sequential belief updating predicts that belief trajectories should exhibit dynamic patterns of dependence on the order in which evidence is presented and its consistency with prior beliefs. To test this, we developed a novel 'urn-and-beads' task that systematically manipulated the order of colored bead sequences and elicited beliefs via an incentive-compatible procedure. Our results in two independent online studies confirmed the predictions of the sequential base-rate neglect model: people exhibited beliefs that are more influenced by recent evidence and by evidence inconsistent with prior beliefs. We further found support for a noisy-sampling inference model whereby base-rate neglect results from rational discounting of noisy internal representations of prior beliefs. Finally, we found that model-derived indices of base-rate neglect—including noisier prior representation—correlated with propensity for unusual beliefs outside the laboratory. Our work supports the relevance of Bayesian accounts of sequential base-rate neglect to real-world beliefs and hints at strategies to minimize deleterious consequences of this pervasive bias. Author summary: Base-rate neglect is a common bias in judgment, a bias defined by a tendency to underuse older information when forming a new belief. This bias can have serious consequences in the real world. Base-rate neglect is often cited as a source of errors in medical and legal decisions, and in many other socially relevant contexts. Despite its broad societal relevance, it is unclear whether current theories capture the expression of base-rate neglect in sequential belief formation, and perhaps more crucially why people have this bias in the first place. In this paper, we find support for a model that describes how base-rate neglect influences belief formation over time, showing that people behave in a way that matches theoretical predictions. Knowing how base-rate neglect influences beliefs over time suggests possible strategies that could be implemented in the future to minimize its impact. We also find support for a model which may explain why people exhibit base-rate neglect in the first place. This model suggests that people's representation of older information in the brain is noisy and that it is therefore rational to underuse this older information to some extent depending on how noisy or unreliable its representation is. Finally, we show that our measures of base-rate neglect and noise in the representation of older information correlate with variation in real-world belief oddity, suggesting that these models capture belief-formation processes likely to dictate functioning in real-world settings. [ABSTRACT FROM AUTHOR]