Base-Rate Fallacy

• A cab was involved in a hit-and-run accident at night. Two cab companies, the Green and the Blue, operate in the city.

• You are given the following data:

• 85% of the cabs in the city are Green and 15% are Blue.

• A witness identified the cab as a Blue cab.

• The court tested his ability to identify cabs under the

• appropriate visibility conditions. When presented with a

• sample of cabs (half of which were Blue and half of which were Green) the witness made correct identifications in 80% of the cases and erred in 20% of the cases.

• Question: What is the probability that the cab involved in the accident was Blue rather than Green?"