Theory and Decision

, Volume 69, Issue 2, pp 257–288

Simple methods for evaluating and comparing binary experiments

Article

DOI: 10.1007/s11238-009-9136-4

Cite this article as:
Weber, T.A. Theory Decis (2010) 69: 257. doi:10.1007/s11238-009-9136-4

Abstract

We consider a confidence parametrization of binary information sources in terms of appropriate likelihood ratios. This parametrization is used for Bayesian belief updates and for the equivalent comparison of binary experiments. In contrast to the standard parametrization of a binary information source in terms of its specificity and its sensitivity, one of the two confidence parameters is sufficient for a Bayesian belief update conditional on a signal realization. We introduce a confidence-augmented receiver operating characteristic for comparisons of binary experiments for a class of “balanced” decision problems, relative to which the confidence order offers a higher resolution than Blackwell’s informativeness order.

Where observation is concerned, Chance favors only the prepared mind.

—Louis Pasteur (1822–1895).

Keywords

Classification problemsDecision making under uncertaintyInformativenessValue of information

Copyright information

© Springer Science+Business Media, LLC. 2009

Authors and Affiliations

  1. 1.Department of Management Science and Engineering, 442 Terman Engineering CenterStanford UniversityStanfordUSA