Base-rate neglect refers to “our inability to apply a statistical rule when faced with a counter-example containing stereotypic information” (Bar-Hillel, 1975). In short, we ignore statistics in situations when we shouldn’t! Why is this a savvy online persuasion technique? Because it allows us to influence on what information you base your decisions. Note, this technique can be powerful so it with care!
Base-rate stands for: how often something occurs in the general population. To illustrate that we often ignore the base-rate, read the following experiment:
Suppose there is a group of 100 people, of whom 70 are engineers and 30 are lawyers. Now meet Bart. Bart is a member of this group. Bart really likes to argue with other people during discussions. Is Bart a lawyer or an engineer? Most people who partake in such experiments say that Bart is a lawyer (because he likes arguing and that’s what lawyers do all day). In fact, the probability that Bart is a lawyer is only 30%. What people do is they ignore the base-rate: that 70% of the people in the group is an engineer and thus that the probability that Bart is an engineer is much higher than that he is a lawyer. Thus, you neglected the base-rate when formulating your answer.
Consumer decision making
When we consumers make decisions about products, say an espresso machine, you evaluate that product on its features. But what you actually do is compare these features (e.g. this machine has a 10 liter water reservoir) with what you think is normal or is the base-rate for espresso machines (e.g. most machines have a 2 liter water reservoir so 10 liters is a clear benefit). Based on this assessment you decide to buy this product. However, most of the time we don’t know what the base-rate is. What is the normal reservoir capacity for espresso machines? I don’t know actually…
Because people don’t know the base-rate of things, we can set the base-rate for them. For example, usually online marketers focus on communicating USP’s (with the emphasis on Unique). The rationale is that when we consumers think something is unique, we’ll be more likely to buy it. But they could also just stress some more obvious USP’s. By merely stressing USP’s you make people believe that these are actually unique UPS’s. See for example Amazon. They promote their Kindle Fire by suggesting a base-rate for your: “the most popular apps and games”. Obviously, these apps and games are available on any (Android) device but this sentence suggests otherwise.
3 Online persuasion tips
- Highlight obvious USP’s: because people usually ignore the base-rate (how many products have feature x), you should also highlight the more obvious USPs. For example, car salesman always point out many details of the car you’re interested in: “This car has an ergonomic dashboard for maximum comfort (all cars have that), anti-impact chasis (required by law), etc.”. They do this because they know you will ignore the fact that all cars have these features. Instead, you probably start thinking: wow, look at all those features this car has!
- Manipulate the base-rate: if the base-rate is against you, try to manipulate it. Most orange juice manufacturers do this: 100% orange juice! Even though we all know most orange are 100% pure orange juice, it still make us believe this product is special. Be careful though: do not use this technique to communicate about your “2% defect rate” for legal and ethical reasons.
- Set the base-rate: You can also just set the base-rate yourself. Make one version of your product the high-end version. It has all the features you can possibly imagine. This is the base-rate version and you show this version first. Next, you present the second and third version. The second, which is the one you want your customers to buy, has just a few features less than the base-rate version. This version is also priced somewhat lower as well. Because people actually want the base-rate model (the full version, because that is the base-rate for them) but think this version is too expensive, they usually opt for the second version. Just go to any consumer electronic retailer and see if you can detect the base-rate model!
Ok, now you understand what base-rate neglect is and how you can use it. Remember, using the base-rate as an online persuasion tool requires you to think about your business ethics too!