Credibility

Not only verbs but also believes can be conjugated

Following on from last week, where I presented a simple example of a Bayesian network with discrete probabilities to predict the number of claims for a motor insurance customer, I will look at continuous probability distributions today. Here I follow example 16.17 in Loss Models: From Data to Decisions [1]. Suppose there is a class of risks that incurs random losses following an exponential distribution (density $f(x) = \Theta {e}^{- \Theta x}$) with mean $1/\Theta$.