Statistical Decision Theory
Because teaching statistical decision theory from the texts of Robert O. Schlaifer was so difficult for the students to understand, Forester decided to prepare his own text, Statistical Selection of Business Strategies. In the course of preparing this book, Forester determined several characteristics of this aspect of statistics. All the problems, treated in rather different ways by mathematics that looked complicated, were capable of solution only if they had one common structure. This common structure could be solved by one purely arithmetical algorithm. While the mathematical solutions were mathematically accurate, the error in finding a formulation that best fit the empiric data was as great as the error introduced by treating the empiric data directly by arithmetical methods. Forester determined that Schlaifer, when describing his simplified method usable when all the data were normal, used the common normal table that gives areas of the two portions of the normal curve, when what was needed for Schlaifer's calculation method was a table showing the center of mass of each portion. Forester prepared such a table. The Forester method was so suited to digital calculation that once desk-top computers became available, problems that had required several hours of slide-rule and adding machine computation were solved almost as fast as the data could be entered.
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