I am very confused when reading chapter 14. the bayasian credibility is P/(P+K). But there was not explaination what K is. is it the same as defined before, i.e. the proportion that deviant from the mean? i.e. 5% 10% etc? If that is the case the credibitily Zb is always very large, i.e. more credibility towards the observation. I am not sure whether this is the bayesian credibility about. Anyone?
The k in the Bayesian credibility formula is not the same as the k discussed in the section on Classical credibility. It does not denote a proportion of the mean. It is simply a parameter which could be estimated in a number of ways. Best wishes Duncan
