Hearing hooves, thinking zebras: A review of the inverse base-rate effect

People often fail to use base-rate information appropriately in decision-making. This is evident in the inverse base-rate effect, a phenomenon in which people tend to predict a rare outcome for a new and ambiguous combination of cues. While the effect was first reported in 1988, it has recently seen a renewed interest from researchers concerned with learning, attention and decision-making. However, some researchers have raised concerns that the effect arises in specific circumstances and is unlikely to provide insight into general learning and decision-making processes. In this review, we critically evaluate the evidence for and against the main explanations that have been proposed to explain the effect, and identify where this evidence is currently weak. We argue that concerns about the effect are not well supported by the data. Instead, the evidence supports the conclusion that the effect is a result of general mechanisms that provides a useful opportunity to understand the processes involved in learning and decision making. We discuss gaps in our knowledge and some promising avenues for future research, including the relevance of the effect to models of attentional change in learning, an area where the phenomenon promises to contribute new insights.