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Glossary · Decision Intelligence

Base Rates

The underlying frequency at which an outcome occurs across a reference class — for example, the percentage of seed-stage startups that reach Series B, or the share of acquisitions that destroy shareholder value. Daniel Kahneman called the systematic neglect of base rates one of the most important findings in behavioral economics.

The underlying frequency at which an outcome occurs across a reference class — for example, the percentage of seed-stage startups that reach Series B, or the share of acquisitions that destroy shareholder value. Daniel Kahneman called the systematic neglect of base rates one of the most important findings in behavioral economics.

Founders and executives consistently overweight the vivid details of their own situation (the "inside view") and underweight the statistical track record of similar bets (the "outside view"). Anchoring forecasts to base rates is the single highest-leverage move for calibrating optimistic projections.

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