What is the probability that the cab involved in the accident was Blue rather than Green?

The correct answer: Around 41%

"A typical answer is around 80%...[But] in fact, the hit-and-run cab is more likely to be Green than Blue. [Psychologists Daniel Kahneman and Amos Tversky] suspect that people err in the hit-and-run problem because they see the base rate of cabs in the city as incidental rather than as a contributing or causal factor. As other experts have pointed out, people tend to ignore, or at least fail to grasp, the importance of base-rate information because it is 'remote, pallid, and abstract,' while target information is 'vivid, pressing, and concrete.'² In evaluating the eyewitness's account, 'jurors' seem to overrate the eyewitness's likelihood of accurately reporting this specific hit-and-run event, while underrating the more general base rate of cabs in the city, because the latter information seems too nonspecific."

--pages 2-3, Randomness
2. Nisbett, Borgida, Crandell, and Reed, 1982 (p. 111)

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