Routledge Dictionary of Economics, Second Edition
A method of revising the probability of an event occurring by taking into account experimental evidence.
The usefulness of this approach depends on the size of the sample used in an experiment. Bayes’s theorem of 1763 originally stated that the probability of q conditional on H (prior information) and p (some further event) varies as the probability of q on H times the probability of p, given q and H.
References
Cyert, R.M. (1987) Bayesian Analyses and Uncertainty in Economic Theory, London: Chapman and Hall.
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