Chp.no.7 Statistical Decision theory.

⏺️What is Statistical Decision theory?
⏩Statistical decision theory is the science of making decisions when there is statistical knowledge or data that can help reduce uncertainty.
⏩ It is a set of methods that help decision-makers choose the best course of action from a number of alternatives.
⏩Some keywords related to statistical decision theory include: Utility function, Game theory, Decision rule, Decision problem, and Prior information.
⏩The problem of statistical decision theory can be stated as follows:
Given a situation where there are several available alternative courses of action
Each of which may lead to a set of mutually exclusive outcomes associated with certain probabilities
⏺️Which course of action should a decision-maker take it
⏩An example of a statistical decision-making problem is when a drug company is deciding whether or not to sell a new pain reliever.
⏩ Then the question is how much of the drug to produce.
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