Pangea Formazione is the Italian leader in the development and application of Bayesian tecnique for businesses.
The Bayesian approach uses the theory of probability to deal with uncertainty and, in general, with problems that a complete understanding is not available.
In this framework, the probability is defined as the degree of belief that a given event would occur which is called "subjective probability".
Subjective does not mean arbitrary: the evaluation of the probability depends upon the amount of information that one can rely on. As a consequence, subjects with different states of information can evaluate the probability of the same event differently.
In order to get a rational and factual assessment of probabilities, they must be correctly ensued from the rules of the probability theory and be coherent when referring to related events playing a role in the same problem.
Advantages of the use of the Bayesian approach in the business management sector are manyfold (significant)
First of all, the Bayesian approach allows inference to be made properly. Imagine being in the presence of a complex scenario; to deal with which it would be useful to identify the causes, often not directly observable, of the occurrence of a certain event among several factors. The Bayesian approach provides the ability to calculate the probability of each factor to cause the given event, unraveling the cause-effect relationship hidden in the data.
For example, in alarm management there is the need to figure out the fault after having observed the alarm signal; or in fraud detection, where the profile and behaviour of a customer can point to an on-going fraud.
Furthermore, the Bayesian approach allows us to evaluate and integrate the experts knowledge regarding a given problem in a descriptive model. Such flexibility is the key feature of the Bayesian statistics, which makes it suitable for a wide range of problems in a variety of sectors.
Finally, the output of the Bayesian reasoning is true probability, informing us of how much we have to weight the occurrence of each event, given the information we received.
This is a crucial aspect in all decision making processes: it is obvious, in fact, that the agents who makes better use of the amount of information he has, would also have access to better assessments and hence maximise the gain by taking the optimal decision.