14PARAMETER ESTIMATION WITH PRIOR PROBABILITIES

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In the previous chapter, we looked at using some important mathematical tools to estimate the conversion rate for blog visitors subscribing to an email list. However, we haven’t yet covered one of the most important parts of parameter estimation: using our existing beliefs about a problem.

In this chapter, you’ll see how we can use our prior probabilities, combined with observed data, to come up with a better estimate that blends existing knowledge with the data we’ve collected.

Predicting Email Conversion Rates

To understand how the beta distribution changes as we gain information, let’s look at ...

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