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Reliability Engineering & System Safety, Volume 118, October 2013, Pages 118-131.
Corwin L. Atwood.
Statwood Consulting, 2905 Covington Road, Silver Spring, MD 20910, USA.
Abstract
When mapping the common-cause alpha factor model from a group of one size to one of another size, the following facts are shown: (1) mapping data down and treating the mapped data like observed data is much too conservative; (2) mapping alpha factors down puts restrictions on the resulting alphas, so their joint distribution cannot be Dirichlet; (3) if the mapped alpha factors’ posterior distributions are moderately bell-shaped, the joint distribution can be approximated well by using correlated logistic-normal conditional probabilities and (4) Bayesian mapping up is possible, but highly sensitive to the prior distribution in the top group.