Actuarial Mathematics
The Bayes Factor is a ratio that quantifies the evidence provided by data in favor of one statistical model over another, often used in Bayesian statistics. It compares the likelihood of the observed data under two competing hypotheses, usually a null hypothesis and an alternative hypothesis. This concept is vital in Bayesian estimation as it helps determine how much more probable one model is compared to another, allowing for informed decision-making in statistical analysis.
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