Authors: Palash Ranjan Das; Gopal Govindasamy
Addresses: Department of Applied Mathematics, University of Calcutta, 92, A.P.C. Road, Kolkata 700009, West Bengal, India ' Madras School of Economics, Chennai 600025, Tamil Nadu, India
Abstract: Credibility theory is a branch of actuarial science devoted to quantify how unique a particular outcome will be when compared to an outcome deemed as typical. In this paper, we will examine the application of the principles of Bayesian credibility theory in rating and ranking movies by a premier online movie database which is based on user's votes. Although the Bayesian credibility theory was developed originally as a method to calculate the risk premium by combining the individual risk experience with the class risk experience, it is generic enough to deal with a wide range of practical applications quite different from the classical application mentioned above. One such diverse application of the theory in an unlikely domain will be discussed in this paper.
Keywords: credibility theory; prior distribution; likelihood function; posterior distribution; loss function; Bayesian approach.
International Journal of Operational Research, 2019 Vol.36 No.2, pp.254 - 269
Received: 11 Feb 2016
Accepted: 14 Nov 2016
Published online: 23 Sep 2019 *