Calculate a credibility-weighted estimate from subject and relevant experience.
Subject experience is 72 claims per 1,000 members. Relevant manual experience is 58 claims per 1,000. The selected credibility for the group is 40%. Credibility estimate = Z x subject experience + (1 - Z) x relevant experience. The trap is treating credibility as all or nothing: either the group result is the truth or the manual is the truth. Name subject experience Subject = 72 claims per 1,000 members. This is the group-specific signal. It is relevant, but its predictive value depends on volume and homogeneity. Name relevant experience Relevant = 58 claims per 1,000 members. This broader experience…
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