Errors in Probabilistic Reasoning and Judgment Biases
Daniel J. Benjamin
Handbook of Behavioral Economics / NBER · 2019
Abstract
A comprehensive survey of how human belief formation departs from Bayes' rule, cataloguing the systematic errors people make when reasoning about probabilities and updating on evidence.
Methodology
Review and organization of the experimental literature on probabilistic judgment, formalizing biases such as base-rate neglect, conservatism, the law of small numbers, and overconfidence within a common framework.
Findings
Documents a stable catalogue of deviations: people neglect base rates yet are conservative in updating, over-infer from small samples (the gambler's and hot-hand fallacies), and are systematically overconfident. These errors are predictable and interact, so real belief-updating is neither Bayesian nor purely random.
Applied nudge
Do not assume users integrate evidence correctly—present base rates explicitly, pre-aggregate noisy signals, and design feedback that counteracts over- and under-inference.
Citation
Benjamin, D. J. (2019). Errors in probabilistic reasoning and judgment biases. NBER Working Paper No. 25200. In Handbook of Behavioral Economics.
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