Confidence is not evidence about odds
How sure a person feels at the start is an accurate reading of that person and nothing else. Everybody standing in the same line was let in by the same feeling, so the group's rate does not move when one
base rate
Meaning
Statistical prediction relies on the historical probability of an event occurring within a defined population. This frequency is known as the base rate, which acts as the starting point for estimating the likelihood of success or failure in any new endeavor. When decision makers ignore this baseline, they rely instead on their own optimism or the unique details of their specific case.
Analytical Baseline
The evaluation of new projects requires an objective measure that sits outside the enthusiast’s own perspective. By comparing a planned venture to the historical base rate of similar undertakings, an analyst can ground their expectations in actual market results. This process of comparison exposes the typical survival rate of new entities, which is usually much lower than the founders assume.
It provides a dry, quantitative check against the tendency to believe that one’s own talent can bypass the standard odds. Without this baseline, the estimation of risk becomes a purely subjective exercise that depends on the confidence of the team rather than on historical reality.
Decision Bias
Cognitive shortcutting often leads individuals to treat their own situation as entirely unique. In the presence of vivid personal stories, a founder treats the general baseline as if it does not apply to their own circumstances. This separation between the individual and the group occurs because the brain prioritizes close-up detail over distant statistics.
The result is a choice made in a vacuum, where the actual probability of the outcome is systematically ignored.
Historical Limit
Historical baselines do not dictate the fate of any single entity but they do govern the collective outcome. Although a specific founder may succeed despite the base rate, the group as a whole will inevitably conform to it.