A case study in selecting optimal number of trials in Bayesian decision making

Issue title: Teaching Statistics

Article type: Research Article

Authors: Lipkovich, Ilya

Affiliations: Department of Statistics, Virginia Tech, Blacksburg, VA 24061, USA. E-mail: [email protected]

Abstract: This educational paper presents an illustration of choosing the optimal sample size within the framework of Bayesian Decision Theory. Using a somewhat artificial but entertaining example (electing an optimal number of dates for a marriage decision), it provides a tutorial for the challenging problem of decision making and walks the reader through various steps needed to be accomplished: formalizing the loss function, choosing priors for the parameters of interest, and computing the posterior expected loss for either of the two possible actions (to marry or not). Finally the optimal sample size (number of dates) is selected as a minimizer for the Bayes risk, evaluated (via simulations) under the assumption that the action with smallest posterior expected loss would be taken.

DOI: 10.3233/MAS-2009-0132

Journal: Model Assisted Statistics and Applications, vol. 4, no. 4, pp. 247-251, 2009