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Article
Assessing Probabilities of Unique Events: A New Approach
Author(s)
Warren Richard Hughes
Full-Text PDF XML 339 Views
DOI:10.17265/1537-1506/2019.01.005
Affiliation(s)
University of Waikato, Hamilton, New Zealand
ABSTRACT
Decision-makers in unique or one-off
situations may have difficulties in framing the probabilities of possible
events that are required in modern decision-making. This paper illustrates a new approach to
probability determination based on pairwise primary judgments on the relative
likelihoods of the possible events. Related “news” on the situation can also be
used to update these prior probabilities using Bayesian Revision. Illustrative
calculations outline the entire process through to determination of posterior
probabilities following a “news” event.
KEYWORDS
Lehman failure, probabilities, odds, Analytic Hierarchy Process (AHP), Bayesian Revision
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