In this video, you will learn about a concept known as base rate fallacy and how you can overcome it. #baseratefallacy #decisionmaking #wallstreetmojo #investing #trading #stockmarket #behavioralfinance Chapters: 00:00 – Introduction 00:33 – What is base rate fallacy? 02:43 – Example of base rate Fallacy. 03:44 – How to overcome? What is base rate fallacy? Many investors and traders fall for something known as base rate fallacy. It is a key concept in behavioral finance, and it was pioneered by 2 Israeli psychologists, Daniel Kahneman and Amos Tversky. (Explained in detail in the video) Base rate fallacy is a human tendency to give more importance to particularly small data over a large set of data that sets the base rate. Base rate fallacy refers to people misjudging events by focusing on events that they feel are more relevant, and they ignore events that are, in turn, the most relevant. (Explained …
