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Ask Lewis: Game Theory And Decision Making
How to be more effective
• Often we cannot make effective, efficient, and productive decisions because we lack the essential information required to do so. This lack of essential information is where a concept known as Bayes’ theorem enters the picture. Bayes’ theorem is named after Rev. Thomas Bayes (1701–1761), who pointed out that sometimes we come to a correct conclusion based on limited information. Bayes provided an equation that allowed new evidence to update beliefs.
• In Probability theory and Statistics, Bayes’ theorem (Bayes’ law or Bayes’ rule) describes the probability of an event, based on prior knowledge of conditions that might be related to the event.
• For example, if osteoarthritis is related to age, then, by using Bayes’ theorem, a person’s age can be used to more accurately assess on a scale the probability that they have this condition; compared to the assessment of the probability of either condition made without knowledge of the person’s age.
• One of the many applications of Bayes’ theorem is Bayesian inference, a particular approach to statistical inference. When applied, the probabilities involved may be interpreted differently based on the biases of the person making the prediction.
