The Math Class You Slept Through

Posted on July 24, 2007. Filed under: Uncategorized |

text1.jpgEVALUATING UNCERTAIN DECISION MAKING

I was never good at probability in school, I always thought ‘when in the world am I ever going to use this again?’ turns out daily. Bummer. Subjective probability, which is the analysis of uncertain decision making is a tool that we use almost constantly. In the compilation of empirical findings in the book “Subjective Probability” editied by George Wright and Peter Ayton, John Fox they define subjective probability as “the process of assessing the relative credibility of a number of alternative hypotheses by assigning degrees of belief to the various alternatives, based on evidence, in such a way that certain axioms are staisfied.” (p. 77-78).

This means, in order to decrease a person’s risk assessment factor in decision making a person must be reliant on quantitative data and sufficent knowledge of the subject. “Vauger subjective” probability is based off ofpoorly structured problems that require the gathering of more information to better understand a decision, this in turn increasesa person’s risk factor.

Lee Roy Beach and Gary P Braun from the University of Arizona define subjective probability as the assessment of the precision of the human mind versus statistical analysis of probability. They divide testing this theory into three categories: objective, subjective, and conservatism: objective studies measure “the dependent variable as accuracy, the difference between the subjects’ judgement and the relative frequencies defined by the presented problem.” (p. 108). The second type of study is subjective, where the sum of two judgements is compared to the judgement intersection, also known as coherence. Finally, conservatism studies measure the use of heuristics (mental short cuts) to make decisions easier. “The amount to which a person’ heuristic falls short of the normative procedure is called bias.” (p. 110).

This book’s overview of subjective probability can be expanded upon so to be applied to various areas of everyday life such as the workplace, home, relationships, etc. Using these theories we will be better able to make confident decision and decrease our risk assessment factor.

Photo Credit: http://www.flickr.com/photos/thatgirlcaitlin/238766888/
Text: Wright, George and Ayton, Peter, Subjective Probability, West Sussex,  England. 1994

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