Using Bayesian Updating to Improve Decisions under Uncertainty

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Abstract

Decision making requires managers to constantly estimate the probability of uncertain outcomes and update those estimates in light of new information. This article provides guidance to managers on how they can improve that process by more explicitly adopting a Bayesian approach. Clear understanding and application of the Bayesian approach leads to more accurate probability estimates, resulting in better informed decisions. More importantly, adopting a Bayesian approach, even informally, promises to improve the quality of managerial thinking, analysis, and decisions in a variety of additional ways.

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APA

McCann, B. T. (2020). Using Bayesian Updating to Improve Decisions under Uncertainty. California Management Review, 63(1), 26–40. https://doi.org/10.1177/0008125620948264

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