Contemporary Bayesian Economics and Statistics
Chapter One
Introduction
The evolution of modern society is driven by decisions that affect the welfare
and choices of large groups of individuals. Of the scores of examples, a few will
illustrate the characteristics of decisionmaking that motivate our approach:
1. A new drug has been developed in the laboratories of a private firm over
a period of several years and at a cost of tens of millions of dollars. It has
been tested in animals, and in increasingly larger groups of human beings
in a succession of highly structured clinical trials. If the drug is approved
by the Food and Drug Administration (FDA), it will be available for all
licensed physicians to use at their discretion. The FDA must decide whether
to approve the drug.
2. Since the mid-1980s evidence from many different sources, taken together,
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