Tuesday, November 29, 2011

Quiz Time: Bayesian Judgement

My friend rates himself as a pretty good connoisseur of wine. To his credit, when I gave him a taste-test some time ago, he could correctly identify a wine variety around 80% of the time.

Last week I bought a mixed case containing 10 bottles of Merlot and 2 of Shiraz. I then took a bottle at random and poured my friend a glass. He said he thought it was a Shiraz.

What is the probability that the bottle actually was a Shiraz?

Friday, November 25, 2011

Analytics in Financial Services

The financial industry usually thinks of analytics in terms of models, pricing and risk metrics. However, at last week's Hedge Fund Conference in Singapore, people were talking about more strategic applications.

Tuesday, November 22, 2011

The Human Side of Analytics

Analytics is ultimately about better decision making and, by implication about people. If your aim is to get someone to do something, you might be better off having them do something sub-optimal with enthusiasm than force them to do the "right" thing begrudgingly.