The Subjectivist View of Decision-Making.
Abstract
The subjectivist, Bayesian paradigm for a decision-maker is described. It is shown how the notion of utility, and the principle of maximizing expected utility both depend on the description of uncertainty through probability. The justification for the necessity of this description due to de Finetti is outlined. The twin, practical problems of the evaluation of the decision-maker's probabilities and utilities are discussed. Probability, as used in the paradigm, is a subjectivist notion which is distinct from the chance, or frequentist, concept and there is discussion of this difference. The calculations for the analysis of a decision tree are described and the notions of the utility of data developed. The statistical analysis of data that flows from the paradigm is described and the basic, likelihood principle derived and discussed. The material is illustrated by a simple example from insurance. (Author)
Document Details
- Document Type
- Technical Report
- Publication Date
- Jul 01, 1981
- Accession Number
- ADA103879
Entities
People
- Dennis V. Lindley
Organizations
- University of Wisconsin–Madison