Glossary · Phase 2 · Math, when you need it
Base-rate fallacy
Forgetting how rare something is to begin with. A 95%-accurate fraud flag can still be wrong most of the time when fraud is rare.
Learn it properly
Conditional probability and Bayes · Update beliefs when new evidence arrives. About 30 minutes.
Other terms from the same lesson
- Bayes' rule: A way to update how likely something is when new evidence arrives.
- conditional probability: How likely something is once you know something else is true, like rain given dark clouds.
- posterior: Your updated belief after seeing the evidence. Bayes' rule turns the prior into the posterior.
- prior: What you believe about a chance before you see new evidence, such as 1% of payments being fraud.