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Jul 27, 2007

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MS&E 252

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MS&E 252

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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

1

What concepts do we expect you to master?

• Distinctions • Relevance

• Kind, degree • Relevance Diagrams

• Probability • The Rules of Arrow

• Background state of Flipping

information (&)

• Inferential notation • Associative Logic

Errors

• Probabilistic inference

• Tree flipping

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

2

What concepts do we expect you to master?

• Distinctions • Relevance

• Kind, degree • Relevance Diagrams

• Probability • The Rules of Arrow

• Background state of Flipping

information (&)

• Inferential notation • Associative Logic

Errors

• Probabilistic inference

• Tree flipping

knowledge.

• Probability allows us to “speak

precisely about our ignorance.”

• Instead of “The probability is …”

say “I assign a probability … to …”

3

Probability Notation

your background state of information

know event B occurred and your

background state of information

your background state of information

probabilistic statements.

“Given B and my background

{A | B, &} = 0.8 means 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)

4

Probabilistic inference is how we learn

about uncertainties indirectly.

probabilities and ...

… through

probabilistic … we can come up

inference ... with probabilities we

have not assessed.

Tree-flipping

distribution of two distinctions.

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

B1

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

0.4

A1

0.9 0.6

A1 B 2 0.54

B2

&

B1

A2 B 1 0.05

0.1 0.5

A2 0.5

A2 B 2 0.05

B2

Σ = 1.00

5

We can then “flip” the tree to infer the

unassessed probabilities.

{B | &} {A | B,&} {BA | &} = {B | &} * {A | B,&}

A1

B1A1 0.36 {A1 B1 | &} = {B1 A1 | &}

0.36

B1 0.41

= 0.88

0.05

0.41 0.41

= 0.12

B1 A2 0.05

A2

&

A1

B2 A1 0.54

0.54

0.59 0.59

= 0.92

B2 0.05

0.59

= 0.08

B2 A2 0.05

A2

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 double-

headed coin?

“H” N

0.25 = “H”N 0.25 = “H”N

0.5 1/3

N “H”

0.5 0.75

0.5 2/3

0.25 = “T”N 0.50 = “H”D

“T” D

0.5 0.25

0.50 = “H”D 0.25 = “T”N

D “H” “T” N

0 = “T”D

6

Let’s flip this tree as an exercise!

B A

21/50 21/50

7/10 21/23

A B

3/5 3/10 23/50 2/23

9/50 2/50

~B ~A

& &

B A

2/50 9/50

2/5 1/10 27/50 1/3

~A 9/10 ~B 2/3

18/50 18/50

~B ~A

C1

3/50

D 3/22

3/50

C1 1/5

D C2

3/10 4/50

4/5 22/50 4/22

12/50

D’

D 15/22

4/50 15/50

2/5 C3

C2

2/10 C1

3/5 12/50

6/50 3/28

D’

D 28/50 C2

15/50 6/50

3/5 D’ 6/28

C3

5/10 2/5 10/28

10/5 10/50

D’ 0 C3

7

What concepts do we expect you to master?

• Distinctions • Relevance

• Kind, degree • Relevance Diagrams

• Probability • The Rules of Arrow

• Background state of Flipping

information (&)

• Inferential notation • Associative Logic

Errors

• Probabilistic inference

• Tree flipping

Introducing Relevance

Probabilistically, A is relevant to B if

{A|B, &} is not equal to {A|B’, &}.

something about the probability of A

occurring, then A is relevant to B.

8

Introducing Relevance

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 &.

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 B

3/4 3/4

A A

1/3 1/4 1/3 1/4

~B ~B

B B

2/3 1/10 2/3 3/4

~A 9/10 ~A 1/4

~B ~B

9

How can we recognize relevance using

trees? (3 or more degrees)

B1

A and B are relevant Otherwise, A and B are

given & if ... A1 0.2 B2 irrelevant given &.

0.3 B3

0.5

B1

}

0.2 … for one of the

B2 degrees of A, the

0.3 distribution of B

A2 B3 differs from ...

0.5

B1

}

… the

0.8 B2 distribution of B

for another

A3 0.1

B3 degree of A.

0.1

trees? (3 or more distinctions)

B and C are relevant

given distinction A

C1

and & if ... … either this

B1 0.3

} distribution differs

from...

A1 C2

C1

B2

0.3

} … this one ...

C2

-- OR --

C1

B1 0.3

} … this distribution

differs from...

C2

A2 C1 Otherwise, B and C

B2

0.6

} … this one. are irrelevant given

distinction A and &.

C2

10

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 C C A B

0.3 … this

Our strategy is to put C

0.5 0.7 differs

and & first in the tree, from ...

0.6

0.5 0.5 then put everything else. … this

0.5

-- OR --

differs

0.6 0.5 and B are relevant given from ...

0.4

C if ...

0.4 0.75 … this.

0.25

is that they grow exponentially.

reflect on relevance regardless of the size of the tree.

11

Introducing Relevance Diagrams

irrelevance statements…

relevance statements!

there is a possibility of relevance between A and B”.

Uncertainty not degrees of the

uncertain distinction!

possibility of relevance.

the biggest statements made are those of irrelevance!

12

Instead of trees,

we can relevance diagrams.

B1

A1 0.714

A B

0.626

0.286

{A | &} {B | A, &}

B2

0.552 pointing in from A into B –

0.374 conditions B on A

A2 0.448

B2 The arrow from A to B only

implies possible relevance.

statements of irrelevance between distinctions.

B1

A1 0.714

0.626

0.286 A B

B2

B1 {AB|&} = {A|&}{B|&}

0.714

0.374

A2 0.286

B2 The absence of an arrow from

A to B asserts irrelevance!

13

Diagrams vs. Trees

C1

B1 0.3

A1 C2

C1 These two A

0.3 numbers are

B2 the same...

C2

-- AND -

C1 - B C

B1 0.3 ...these two

numbers are

C2 the same

A2 C1 A is IRR to C | B, &

0.3

B2 C2

From trees we can make both From diagrams we can only

relevance and irrelevance make statements of

statements. irrelevance!

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

14

Adding or taking away information can

change relevance relationships.

they are now relevant to each other.

Sum

Die 1 Die 2

other given their sum and &.”

as a way to clarify our thoughts and

learn which assessments need to be B C

made.

C1

0.3

C1

0.3

C2

that reduce the number of probability B1

C1

0.3

assessments that need to be made. C2

A2 C1

0.3

B2 C2

15

Irrelevance helps us simplify our

probabilistic thinking.

Bayes’ Rule tells us that:

{ABC|&}={A|&} * {B|A, &} * {C|B, A, &}

{ABC|&} = {A|&}* {B|A, &}* {C|B, &}

A

B C

B | A, & C | B, &

• Kind, degree • Relevance Diagrams

• Probability • The Rules of Arrow

• Background state of Flipping

information (&)

• Inferential notation • Associative Logic

Errors

• Probabilistic inference

• Tree flipping

16

Just like we can flip trees, we can flip

arrows in relevance diagrams.

{A | &} {B | A, &}

A B

A B

{A | B, &} {B | &}

be conditioned on the same state of information.

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.”

X X

A B

17

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.”

C

In other words, any other node

(here, C and D) which points to A ?

also points to B. A B

certain rules.

RULE #3

“You cannot remove any arrows arbitrarily.”

A B

18

Example of diagram manipulation

(arrow-flipping)

C D E

Can we flip the arrow

Q

between A and B?

A B

A information!

A has arrows from C and D, but B has arrows from D and E.

(arrow-flipping)

C D E

A

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.

19

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 B

A B

C

irrelevant given & irrelevant given C and &

from diagrams.

A B

Yes; they are both conditioned only on & and there is no

arrow between them.

20

An example of recognizing irrelevance

from diagrams.

A B

Yes; they are both conditioned only on & and there is no

arrow between them.

Yes; add arrows from C to B and E to A.

from diagrams.

C D E C D E C D E

next

A B A B A B line

C D E C D E

A B A B

21

Another example of recognizing

irrelevance from diagrams.

Market size

• Revenue and Cost irrelevant given Market Size, &?

• Profit and Annual Growth irrelevant given &?

• Kind, degree • Relevance Diagrams

• Probability • The Rules of Arrow

• Background state of Flipping

information (&)

• Inferential notation • Associative Logic

Errors

• Probabilistic inference

• Tree flipping

22

What is constitutes an

Associative Logic Error?

Error” when they fall into the trap

{A|B,&} = {B|A,&}

… but the probability for a

Hemophiliacs are virtually

male to be a hemophiliac is

all male…

1/1000 or less!

23

Examples of Associative Logic Errors

Most people who are treated … and yet the probability of

for lung cancer seem to be getting lung cancer if you are a

heavy smokers… heavy smoker is as low as 0.1!

24

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