The probabilities of states of nature after revising the prior probabilities based on given indicator information are
A)the expected probabilities
B)the posterior probabilities
C)the prior probabilities
D)None of the answers are correct.

Question

Quizplus · Accepted Answer

Revising the prior probabilities based on new information results in the posterior probabilities, which are the updated probabilities of the states of nature. Option A is incorrect because expected probabilities are calculated based on the probabilities and payoffs. Option C is incorrect because prior probabilities are the initial probabilities before any new information is considered. Option D is incorrect because the correct answer is B.

The Probabilities of States of Nature After Revising the Prior