STATISTICAL DECISION THEORY AS A GUIDE TO INFORMATION PROCESSING
RAND CORP SANTA MONICA CA
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The advance which decision theory makes over previous methods in mathematical statistics is that the economic consequences of an action are explicitly taken into account. In other words, the theory goes beyond statements about probabilities of making various errors, and incorporates both the relative losses from such errors as well as the costs of processing information in order to reduce the likelihood of mistakes. One important consequence claimed by decision theorists is that by such analysis it is possible to unify various subfields in statistics into a single conceptual framework.
- Operations Research