Predation can result in differing patterns of local prey diversity depending on whether predators are selective and, if so, how they select prey. A recent study comparing the diversity of juvenile fish assemblages among coral reefs with and without predators concluded that decreased prey diversity in the presence of predators was most likely caused by predators actively selecting rare prey species. We used several related laboratory experiments to explore this hypothesis by testing: (1) whether predators prefer particular prey species, (2) whether individual predators consistently select the same prey species, (3) whether predators target rare prey, and (4) whether rare prey are more vulnerable to predation because they differ in appearance/colouration from common prey. Rare prey suffered greater predation than expected and were not more vulnerable to predators because their appearance/colouration differed from common prey. Individual predators did not consistently select the same prey species through time, suggesting that prey selection behaviour was flexible and context dependent rather than fixed. Thus, selection of rare prey was unlikely to be explained by simple preferences for particular prey species. We hypothesize that when faced with multiple prey species predators may initially focus on rare, conspicuous species to overcome the sensory confusion experienced when attacking aggregated prey, thereby minimizing the time required to capture prey. This hypothesis represents a community-level manifestation of two well-documented and related phenomena, the "confusion effect" and the "oddity effect", and may be an important, and often overlooked, mechanism by which predators influence local species diversity.