Analyze decisions and strategies using probability

What you'll learn

1. Analyze a real decision by identifying the strategies, uncertain outcomes, probabilities, and payoffs
2. Use expected value to compare strategies, and recognize when risk or error-cost asymmetry should modify the expected-value choice
3. Apply conditional probability to evaluate testing decisions, computing P(condition | positive) and explaining the base-rate effect
4. Analyze a strategic timing decision (pulling the hockey goalie) by comparing each strategy's net effect on the probability of winning
5. Communicate a probability-based recommendation that states its assumptions and limitations

Prerequisites

• Calculate the expected value of a random variable
• Find the expected payoff for a game of chance
• Evaluate and compare strategies using expected values
• Understand conditional probability