Michael William Gannon

Summary:

The author applies Bayesian analysis to the problem of cruise missile proliferation. The author defines Bayesian analysis as, "a quantitative procedure in which alternative hypothetical outcomes are postulated and their prior probabilities estimated. As additional relevant events occur, the probabilities of their association with each hypothesis are used to calculate a revised probability for each alternative outcome." He notes that Bayesian analysis has been used by the CIA to provide Indicators & Warnings (I&W) as to the probability of outbreak of armed conflict. Any observed event has a probability associated with its actual occurrence, depending on initial causes. By observing and evaluating events that do occur, "posterior probabilities" can be assigned to each cause, creating a likelihood of an event that may occur in the future based on similar initial causes.

Strengths of the method, according to the author, are "The principal advantage of the method is the establishment of a formal analytical framework which accommodates weighted inputs of all observed events, makes differing interpretations of a given event more explicit, and provides a readily available chronological record of the analytical process." A major weakness to the method, however, is that it "is limited to situations which can be expressed as a number of

mutually exclusive outcomes. An ample flow of data which is logically related to the hypotheses to be tested must be available, and analysts must be qualified to assign realistic probabilities associating the observed events to their hypothetical causes."

In assessing the history of Bayesian analysis, the author notes that the CIA found that Bayesian analysis and the Delphi method to be highly complimentary. Furthermore, the CIA found that Bayesian analysis had distinct advantages over other methods. These advantages were:

(1) More information can be extracted from the available data.. .and probabilities are not at the mercy of the most recent or most visible item.

(2) The formal procedure has been shown to be less conservative than the analysts' informal opinions, and to drive the probabilities away from fifty-fifty faster and farther than the analysts' overall subjective judgments do....

(3) The procedure provides a reproducible sequence for arriving at the final figures ....

(4) The formulation of the questions forces the analyst to consider alternative explanations of the evidence he sees.. . [and] to look at how well the evidence explains hypotheses other than the one he has already decided is the most likely.

(5) The use of quantified judgments allows the results of the analysis to be displayed on a numerical scale, rather through through the use of [subjective terms].

Limitations discovered by the CIA included:

(1) The question must lend itself to formulation in mutually exclusive categories .

(2) The question must be expressed as a specific set of hypothetical outcomes.

(3) There should be a fairly rich flow of data which is at least peripherally related to the question.

(4) The question must revolve around the type of activity that produces preliminary signs and is not largely a chance or random event.

Ultimately, Bayesian analysis is intended as a forecasting tool, but has the added benefit of utilizing raw data (which can be "graded" for source reliability and assessed for explanatory hypotheses). This provides the analyst with a "quick reference" source to conduct "snap shot evaluations" on current program evaluations, such as the state of a nations missile program.

Authors Comment:

This paper is a master's thesis that used Bayesian Analysis to assess future cruise missile proliferation. I did not include any findings of the thesis in this summary; instead I summarized the sections that dealt with the method of Bayesian analysis itself.

## Saturday, May 2, 2009

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