Glossary term
Base Rate
The historical frequency of an event class; the calibration anchor any forecast should start from before adjusting for specifics.
Base Rate is the historical frequency of an event class — how often this kind of thing happens in general. It is the calibration anchor any forecast should begin from before adjusting for case-specific evidence, and ignoring it is the classic source of overconfident predictions. Closelook treats the base rate as the prior that a market price must beat to offer real edge. See Prediction Markets 101.