In our real world, where the quality and quantity of information ranges from excellent to terrible, would some measure of the certainty of the data tend to lead to better decisions?
Can point estimates and confidence intervals help to provide some measure as to the certainty of data values?© BrainMass Inc. brainmass.com October 9, 2019, 8:15 pm ad1c9bdddf
(1) Absolutely, some measure of certainty of the data would lead to better business decisions. To understand this, think of some examples.
Imagine that you are thinking of investing in real estate and want to buy a house in a neighborhood where the average price of a house is $200,000. Say you are looking at two neighborhoods, in which to buy a house. The mean price in both neighborhoods is $201,050. However, just looking at the mean doesn't tell you that much. If you look at the standard deviations of the prices in both neighborhoods, you might find that one standard deviation is $50,000 and the other is $2000. This would indicate that the houses in the 1st neighborhood have widely different prices, while the prices in the 2nd ...