Quantization of Prior Probabilities for Hypothesis Testing

Bayesian hypothesis testing is investigated when the prior probabilities of the hypotheses, taken as a random vector, are quantized. Nearest neighbor and centroid conditions are derived using mean Bayes risk error as a distortion measure for quantization. A high-resolution approximation to the distortion-rate function is also obtained. Human decision making in segregated populations is studied assuming Bayesian hypothesis testing with quantized priors

Wittgenstein on Prior Probabilities

Wittgenstein did not write very much on the topic of probability. The little we have comes from a few short pages of the Tractatus, some 'remarks' from the 1930s, and the informal conversations which went on during that decade with the Vienna Circle. Nevertheless, Wittgenstein's views were highly influential in the later development of the logical theory of probability. This paper will attempt to clarify and defend Wittgenstein's conception of probability against some oft-cited criticisms that stem from a misunderstanding of his views. Max Black, for instance, criticises Wittgenstein for formulating a theory of probability that is capable of being used only against the backdrop of the ideal language of the Tractatus. I argue that on the contrary, by appealing to the 'hypothetical laws of nature', Wittgenstein is able to make sense of probability statements involving propositions that have not been completely analysed. G.H. von Wright criticises Wittgenstein's characterisation of these very hypothetical laws. He argues that by introducing them Wittgenstein makes what is distinctive about his theory superfluous, for the hypothetical laws are directly inspired by statistical observations and hence these observations indirectly determine the mechanism by which the logical theory of probability operates. I argue that this is not the case at all, and that while statistical observations play a part in the formation of the hypothetical laws, these observations are only necessary, but not sufficient conditions for the introduction of these hypotheses

Approximating predictive probabilities of Gibbs-type priors

Gibbs-type random probability measures, or Gibbs-type priors, are arguably the most "natural" generalization of the celebrated Dirichlet prior. Among them the two parameter Poisson-Dirichlet prior certainly stands out for the mathematical tractability and interpretability of its predictive probabilities, which made it the natural candidate in several applications. Given a sample of size $n$, in this paper we show that the predictive probabilities of any Gibbs-type prior admit a large $n$ approximation, with an error term vanishing as $o(1/n)$, which maintains the same desirable features as the predictive probabilities of the two parameter Poisson-Dirichlet prior.Comment: 22 pages, 6 figures. Added posterior simulation study, corrected typo

A Theory of Bayesian Decision Making

This paper presents a complete, choice-based, axiomatic Bayesian decision theory. It introduces a new choice set consisting of information-contingent plans for choosing actions and bets and subjective expected utility model with effect-dependent utility functions and action-dependent subjective probabilities which, in conjunction with the updating of the probabilities using Bayes' rule, gives rise to a unique prior and a set of action-dependent posterior probabilities representing the decision maker's prior and posterior beliefs.

Topics in inference and decision-making with partial knowledge

Two essential elements needed in the process of inference and decision-making are prior probabilities and likelihood functions. When both of these components are known accurately and precisely, the Bayesian approach provides a consistent and coherent solution to the problems of inference and decision-making. In many situations, however, either one or both of the above components may not be known, or at least may not be known precisely. This problem of partial knowledge about prior probabilities and likelihood functions is addressed. There are at least two ways to cope with this lack of precise knowledge: robust methods, and interval-valued methods. First, ways of modeling imprecision and indeterminacies in prior probabilities and likelihood functions are examined; then how imprecision in the above components carries over to the posterior probabilities is examined. Finally, the problem of decision making with imprecise posterior probabilities and the consequences of such actions are addressed. Application areas where the above problems may occur are in statistical pattern recognition problems, for example, the problem of classification of high-dimensional multispectral remote sensing image data