Evidence shows that people use stereotypes reasonably and indeed they improve accuracy because they are accurate priors.
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This scenario happens when the prior is too strong, but research shows that people's stereotypes are generally too weak (ie underestimate true group differences), not too strong.
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In fact, it's not even entirely clear from the evidence he reviews that people shouldn't use stereotypes *more*, at least if we only care about accuracy.
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If anything, people seem to disregard statistics entirely: “I’m afraid of flying so we’re driving there.”
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Stereotypes result from observation or education or a combination. Eg without racial quotas, 50% of blacks would earn less than 10,000 per year. Today, one in three black men eventually to prison. Desire to survive=observation-based stereotypes.
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