Bayesian Solutions to a 2 x 2 Decision Matrix Using Interval Scaled Payoffs with an Application to Foreign Policy Decisions.
NAVAL POSTGRADUATE SCHOOL MONTEREY CA
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Statistical Design Theory is applied to assessing objectively the uncertainty involved in foreign policy decisions. In an international conflict of interest situation, a protagonist is going to pursue. This problem is addressed by taking observations of the antagonists behavior. These observations are interpreted as being associated with a specific course of action. Bayes formula is then used to update a conjectured a prior probability function to estimate the course of action being pursued by the antagonist. This updated a posteriori conditional probability function is then used to develop a decision rule to select an appropriate response. The decision rule is based on an ordering of possible outcomes, the values assigned to those outcomes, and greatest expected value of return.
- Statistics and Probability
- Government and Political Science