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A Case Study of Using Bayesian Inference for Decision MakingImage by the author.One question many of us come across while shopping on Amazon is: how do I compare two ratings? Amazon ratings give us two important pieces of information: the distribution of ratings (how many were five stars, four stars, three stars, two stars or one star) and how many reviews each product received. Comparing distributions can be pretty straightforward: we can compare the average ratings between two products and then decide. How do we…

Image by the author.The beauty of Bayesian statistics is, at the same time, one of its most annoying features: we often get answers in the form of “well, the number is somewhere between…”If on one hand, this might be frustrating to business strategists or policymakers looking for straightforward guidance, it is also a fantastic way to know how wrong you can be.To start with a simple example, let us say that we are given the task of finding the distribution of heights of students in a high school classroom. Maybe this…