The ability to process new information and to compute conditional probabilities iscrucial for making appropriate decisions under uncertainty. In this paper, weinvestigate the capability of inferring conditional probabilities in a representativesample of the German population. Our results show that only a small fraction ofthe population responds consistently with Bayes'' rule. Instead, most individualseither neglect the base probability, or the arrival of new information, in theirresponses. The probability to give normatively correct answers decreases with thelevel of education.
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Paper provided by Maastricht : ROA, Research Centre for Education and the Labour Market in its series Research Memoranda with number
001.