Update a prior belief (base rate) with new evidence and compute the posterior probability. Essential for interpreting medical tests, A/B experiments, spam filters, and any "I got a positive result â what does it actually mean?" situation.
| Has condition | No condition | Total | |
|---|---|---|---|
| Test positive | â | â | â |
| Test negative | â | â | â |
| Total | â | â | 10,000 |
When the base rate is small, even a very accurate test produces mostly false positives â because the pool of true negatives is so much larger than the pool of true positives. This is the base rate fallacy, and it's why screening rare conditions in a general population is surprisingly unreliable.