MS&E 252 Decision Analysis I Problem Session 3

Announcements
• Make sure to CC your buddy in any emails to your TA • Amount of time spent on homeworks

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What concepts do we expect you to master?
• Distinctions
• Kind, degree

• Relevance
• Relevance Diagrams

• Probability
• Background state of information (&) • Inferential notation

• Probabilistic inference
• Tree flipping

• The Rules of Arrow Flipping • Associative Logic Errors

What are the important distinctions about distinctions?
• Kind: type of grouping (beer drinker, college graduate) • Degree: separation within grouping (beer drinker vs. not beer drinker)
Probability tree representation: Kinds Degrees

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What concepts do we expect you to master?
• Distinctions
• Kind, degree

• Relevance
• Relevance Diagrams

• Probability
• Background state of information (&) • Inferential notation

• Probabilistic inference
• Tree flipping

• The Rules of Arrow Flipping • Associative Logic Errors

We encode our uncertainty using probability.
Uncertainty comes from our lack of knowledge. • Probability allows us to “speak precisely about our ignorance.” • Instead of “The probability is …” say “I assign a probability … to …” Your probability changes as your knowledge changes.

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Probability Notation
& {A|&} {A|B,&}
your background state of information probability of event A occurring given your background state of information probability of event A occurring given you know event B occurred and your background state of information probability of event AB occurring given your background state of information

{AB|&}

We will use Inferential Notation for probabilistic statements.
{A | B, &} = 0.8

means

“Given B and my background state of information, I assign a probability of 0.8 to A”

• Two remarks:
– We condition A on B when we think about A given that B happened. – Always condition probabilities on & (your background state of information)

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Probabilistic inference is how we learn about uncertainties indirectly.
We start with assessed probabilities and ... … through probabilistic inference ... … we can come up with probabilities we have not assessed.

Tree-flipping

But what exactly is tree-flipping?

In this example, we first calculate the joint distribution of two distinctions.
{A | &} {B | A,&}
B1 A1 0.9 0.4 0.6 B2 B1 0.1 A2 0.5 0.5 B2

{AB | &} = {A | &} * {B | A,&}
A1 B 1 0.36 = {A1 B1 | &} = (0.9)*(0.4)

A1 B 2 A2 B 1

0.54 0.05

&

A2 B 2

0.05

Σ = 1.00

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We can then “flip” the tree to infer the unassessed probabilities.
{B | &} {A | B,&}
A1 B1 0.41
0.36 0.41 0.05 0.41

{BA | &} = {B | &} * {A | B,&}
B1A1 0.36 {A1 B1 | &} = {B1 A1 | &}

= 0.88 = 0.12

&
0.59 B2

A2 A1
0.54 0.59 0.05 0.59

B1 A2 B2 A1

0.05 0.54

= 0.92 = 0.08

A2

B2 A2

0.05

Σ = 1.00

Here is an example of probabilistic inference.
• I have two coins in my pocket; one is normal (N) and the other is “double-headed” (D). • I take a coin out of my pocket and flip it – “Heads”! • What is the probability that I originally chose the doubleheaded coin?
N 0.5 0.5 D “H” 0.5 0.5 “T” “H” 0.25 = “H”N “H” 0.75 0.25 = “T”N 0.50 = “H”D 0 = “T”D 0.25 “T” N 1/3 2/3 D N 0.25 = “H”N

0.50 = “H”D 0.25 = “T”N

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Let’s flip this tree as an exercise!
B A 3/5 7/10 3/10 ~B B 2/5 ~A 1/10 9/10 ~B 21/50 B 9/50 23/50 A 21/23 2/23 ~A A 27/50 ~B 1/3 2/3 ~A 21/50

2/50 9/50

&

&
2/50

18/50

18/50

This tree is a little trickier.
C1 3/10 D 1/5 4/5 D’ D 2/5 3/5 D’ D 3/5 2/5 D’ 3/50 D 12/50 4/50 6/50 15/50 10/5 0 28/50 D’ 22/50 C1 3/22 C2 4/22 15/22 C3 C1 3/28 C2 6/28 10/28 C3 3/50 4/50 15/50 12/50 6/50 10/50

C2 2/10

C3 5/10

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What concepts do we expect you to master?
• Distinctions
• Kind, degree

• Relevance
• Relevance Diagrams

• Probability
• Background state of information (&) • Inferential notation

• Probabilistic inference
• Tree flipping

• The Rules of Arrow Flipping • Associative Logic Errors

Introducing Relevance
Probabilistically, A is relevant to B if {A|B, &} is not equal to {A|B’, &}. • In other words, if knowing B tells you something about the probability of A occurring, then A is relevant to B.

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Introducing Relevance
• Relevance, like probability, describes a person’s beliefs about the world, not the world itself. • Relevance does not imply causality. • Relevance is a matter of information, not logic. A and B could be relevant given &, and yet irrelevant given C and &.

Probability trees can help determine whether distinctions are “relevant” to each other.
• If knowing outcome A tells you something about the probability of B, then A is relevant to B. • Otherwise they are irrelevant. • A is relevant to B iff {B|A, &} ≠ {B|~A, &}.
B A 1/3 3/4 1/4 ~B B 2/3 ~A 1/10 9/10 ~B 2/3 ~A A 1/3 B 3/4 1/4 ~B B 3/4 1/4 ~B

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How can we recognize relevance using trees? (3 or more degrees)
A and B are relevant given & if ... A1
B1 0.2 0.3 0.5 0.2 A2 0.3 0.5 0.8 A3 0.1 0.1 B2 B3 B1 B2 B3 B1 B2 B3

Otherwise, A and B are irrelevant given &.

} }

… for one of the degrees of A, the distribution of B differs from ...

… the distribution of B for another degree of A.

How can we recognize relevance using trees? (3 or more distinctions)
B and C are relevant given distinction A and & if ... B1
A1 B2 B1 C1 0.3 C2 C1 0.3 C2 C1 0.3 C2 C1 0.6 B2 C2

} } } }

… either this distribution differs from...

… this one ... -- OR -… this distribution differs from...

A2

… this one.

Otherwise, B and C are irrelevant given distinction A and &.

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But sometimes we first need to flip the tree to determine whether there is relevance.
Are A and B irrelevant given C and &?
A B
0.5 0.6 0.5

C
0.3 0.7 0.5 0.5 0.5 0.5 0.75 0.25 Our strategy is to put C and & first in the tree, then put A and B, and then put everything else. Then look at the tree. A and B are relevant given C if ...

C

A

B
… this differs from ...

… this -- OR -… this differs from ...

0.4

0.6 0.4

… this.

One problem with trees is that they grow exponentially.

It would thus be nice to have another tool that would help us reflect on relevance regardless of the size of the tree.

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Introducing Relevance Diagrams
Relevance diagrams can make irrelevance statements… … but they cannot make any relevance statements!

You should get used to saying “the diagram shows that there is a possibility of relevance between A and B”.

Clarifying our notation...
Uncertainty Note that these are kinds, not degrees of the uncertain distinction! Arrows indicate the possibility of relevance.
So when building or assessing a relevance diagram, the biggest statements made are those of irrelevance!

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Instead of trees, we can relevance diagrams.
Probability Tree
B1 A1 0.626 0.714 0.286 B2 B1 0.374 A2 0.552 0.448 B2

Relevance Diagram

A {A | &}
No arrows pointing in

B {B | A, &}
Arrow pointing from A into B – conditions B on A

The arrow from A to B only implies possible relevance.

Relevance diagrams allow us to make strong statements of irrelevance between distinctions.
Probability Tree
B1 A1 0.626 0.714 0.286 B2 B1 0.374 A2 0.714 0.286 B2

Relevance Diagram

A

B

{AB|&} = {A|&}{B|&}

The absence of an arrow from A to B asserts irrelevance!

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Diagrams vs. Trees
B1 A1 B2 B1 A2 B2 C1 0.3 C2 C1 0.3 C2 C1 0.3 C2 C1 0.3 C2
These two numbers are the same... -- AND ...these two numbers are the same

A

B

C

A is IRR to C | B, &
From diagrams we can only make statements of irrelevance!

From trees we can make both relevance and irrelevance statements.

Relevance is a matter of information, not logic.
Example
– Assume you have two “fair” dice. – You believe the result of each die toss is irrelevant to the other.
Die 1 Die 2

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Adding or taking away information can change relevance relationships.
But once you know the sum of the two tosses, they are now relevant to each other.
Sum Die 1 Die 2

“The two tosses MAY BE relevant to each other given their sum and &.”

How are these two tools used?
• We start building the relevance diagram, as a way to clarify our thoughts and learn which assessments need to be made. • We then make the necessary probability assessments and build our trees.
Note that it is the irrelevance statements that reduce the number of probability assessments that need to be made.
A

B

C

B1 A1 B2 B1

C1 0.3 C2 C1 0.3 C2 C1 0.3 C2 C1 0.3

A2 B2

C2

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Irrelevance helps us simplify our probabilistic thinking.
Bayes’ Rule tells us that: {ABC|&}={A|&} * {B|A, &} * {C|B, A, &} A|&
A This diagram is telling us the same thing! {ABC|&} = {A|&}* {B|A, &}* {C|B, &}

B

C

B | A, &

C | B, &

What concepts do we expect you to master?
• Distinctions
• Kind, degree

• Relevance
• Relevance Diagrams

• Probability
• Background state of information (&) • Inferential notation

• Probabilistic inference
• Tree flipping

• The Rules of Arrow Flipping • Associative Logic Errors

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Just like we can flip trees, we can flip arrows in relevance diagrams.
{A | &} A {B | A, &} B

A {A | B, &}

B {B | &}

Arrow flipping requires that the two distinctions be conditioned on the same state of information.

We can only flip arrows according to certain rules.
RULE #1
“Add arrows wherever you want, provided you don’t create a cycle; A cycle made by more than 3 nodes is also not allowed.”

A

X X
B C

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We can only flip arrows according to certain rules.
RULE #2
“You can flip an arrow between A and B if and only if A and B are conditioned on the same state of information.”
In other words, any other node (here, C and D) which points to A also points to B. *Tip* – Draw a box around A and B C A
?

B

D

We can only flip arrows according to certain rules.
RULE #3
“You cannot remove any arrows arbitrarily.”

A

B

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Example of diagram manipulation (arrow-flipping)
C D E

Can we flip the arrow Q between A and B?

A

B

No, since A and B are conditioned on different states of A information!
A has arrows from C and D, but B has arrows from D and E.

Example of diagram manipulation (arrow-flipping)
C A D E

We need to add arrows from C to B and E to A.

A

B

A

Now, A and B are conditioned on the same state of information, so we can now flip the arrow.

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Why would we want to manipulate diagrams?
• We can recognize irrelevance without needing to assess numbers. • If there is no arrow between nodes A and B given the same state of information S, then A and B are irrelevant given S.
A A B C A and B are irrelevant given C and & B

A and B are irrelevant given &

An example of recognizing irrelevance from diagrams.
Consider the following diagram:
C A D B E

• Are C and D irrelevant given &?
Yes; they are both conditioned only on & and there is no arrow between them.

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An example of recognizing irrelevance from diagrams.
Consider the following diagram:
C A D B E

• Are C and D irrelevant given &?
Yes; they are both conditioned only on & and there is no arrow between them.

• Are A and B irrelevant given C, D, E, and &?
Yes; add arrows from C to B and E to A.

An example of recognizing irrelevance from diagrams.
• Are A and B irrelevant given &?
C A D B C A D B E C A E D B C A D B E C A E D B E
next line

So we can’t conclude! There is a possibility of relevance.

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Another example of recognizing irrelevance from diagrams.
Annual growth Market size Cost

Competition

Revenue

Profit

• Cost and Competition irrelevant given &? • Revenue and Cost irrelevant given Market Size, &? • Profit and Annual Growth irrelevant given &?

What concepts do we expect you to master?
• Distinctions
• Kind, degree

• Relevance
• Relevance Diagrams

• Probability
• Background state of information (&) • Inferential notation

• Probabilistic inference
• Tree flipping

• The Rules of Arrow Flipping • Associative Logic Errors

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What is constitutes an Associative Logic Error?
We say that people make an “Associative Logic Error” when they fall into the trap {A|B,&} = {B|A,&}

Examples of Associative Logic Errors
Some can be quite obvious…
Hemophiliacs are virtually all male… … but the probability for a male to be a hemophiliac is 1/1000 or less!

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Examples of Associative Logic Errors
… But other examples can be very tricky.
Most people who are treated for lung cancer seem to be heavy smokers… … and yet the probability of getting lung cancer if you are a heavy smoker is as low as 0.1!

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