The Effect of On-the-Job Experience on Base-Rate Neglect: Evidence from Medical Professionals

We study the effect of on-the-job experience on base-rate neglect, which is a common bias in assessing conditional probabilities. We do so by carrying out experiments with medical professionals, who are routinely exposed to conditional-probability problems in the form of diagnostic tests, and nonmedical professionals, who are not. As such, medical workers with more years of experience will have had more exposure to base-rate type problems than nonmedical workers with similar years of experience. We estimate the effect of on-the-job experience by comparing the answers of more or less experienced professionals in both the medical and nonmedical domains. Although the incidence of the bias is high for both groups and all levels of experience, we find that more experienced medical workers (a) have lower rates of perfect base-rate neglect (i.e., completely ignoring the base rates), (b) provide more accurate posterior estimates, and (c) adjust their estimates more in response to changes in the base rates. We observe no such difference for nonmedical workers. We conduct a number of robustness checks and consider possible mechanisms, such as education, job or survey attrition, selectivity into medical professions, and experience with false positives. Our results suggests that on-the-job experience mitigates, but does not eliminate, base-rate neglect. This paper was accepted by Lauren Cohen, finance. Funding: This work was supported by Lehigh University [FRG Grant]. Supplemental Material: The online appendices and data files are available at https://doi.org/10.1287/mnsc.2024.05461 .