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Statistical Decision Theory: Concepts, Methods and ...

Statistical Decision Theory: Concepts, Methods and Applications (Special topics in Probabilistic Graphical Models) FIRST COMPLETE DRAFT November 30, 2003 Supervisor: Professor J. Rosenthal STA4000Y Anjali Mazumder 950116380 Part I: Decision Theory Concepts and Methods 1 Part I: Decision THEORY - Concepts and Methods Decision theory as the name would imply is concerned with the process of making decisions. The extension to Statistical Decision theory includes Decision making in the presence of Statistical knowledge which provides some information where there is uncertainty. The elements of Decision theory are quite logical and even perhaps intuitive.

Statistical decision theory is based on probability theory and utility theory. Focusing on the former, this sub-section presents the elementary probability theory used in decision processes. The probability distribution of a random variable, such as X, which is .

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