Final answer:
It is true that people often have difficulty accurately interpreting base rate information, influenced by various cognitive biases such as base rate fallacy and anchoring bias, as well as tendencies to provide socially desirable responses.
Step-by-step explanation:
True/False: If given base rate information, people are not very good at interpreting it correctly. The statement is generally true. People often struggle with interpreting base rate information accurately. This difficulty is due to several cognitive biases and limitations in human judgment and decision-making. For example, when given base rate information along with other details, individuals tend to overlook the base rate in favor of more specific, anecdotal information, a phenomenon known as the base rate fallacy.
Consider an example from a survey: if people are asked how often they drink alcohol, their responses may not be reliable due to tendencies to misremember or respond in a socially desirable way. Furthermore, people can also be influenced by random numbers provided to them beforehand, which anchors their subsequent estimates closer to that random number, showing an anchoring bias.
In psychological research, such as the quizmaster study, participants often disregard situational factors, mistaking a person's role-driven behavior for actual knowledge or skill. This is an example of the fundamental attribution error. The struggles with base rate and other statistical information lead to issues such as false alarms or incorrect rejections in various fields, including information security and labor statistics.