A Maximum Decisional Efficiency estimation principle

A Maximum Decisional Efficiency estimation principle

0.00 Avg rating0 Votes
Article ID: iaor1996258
Country: United States
Volume: 41
Issue: 1
Start Page Number: 76
End Page Number: 82
Publication Date: Jan 1995
Journal: Management Science
Authors:
Keywords: decision, statistics: inference, decision theory: multiple criteria
Abstract:

This paper proposes a systematic approach to certain parameter estimation problems relevant to applied optimization models. A context-specific measure of decision maker performance called decisional efficiency is defined as a function of the unknown parameter vector. The values of this measure are considered to be distributed according to a performance density. Then a principle of Maximum Decisional Efficiency is proposed and its relationship to the Maximum Likelihood principle of statistics is discussed. The principle is first illustrated on a problem of group ideal point estimation. Next, estimation of the ratio of ordering and holding costs in inventories managed by the EOQ model is considered. The results in both these examples are intuitively appealing, suggesting face validity of the principle. A more detailed illustration is developed for the problem of deriving a consensus scoring model for credit applicants which combines the data of more than one loan officer.

Reviews

Required fields are marked *. Your email address will not be published.