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BayesiaLab Conference

Conference Presentation

Reasonable Certainty: Why Courts Should Use Bayesian Belief Networks to Estimate Economic Damages

Kurt S. Schulzke, JD, CPA, CFE, Associate Professor of Accounting & Law, University of North Georgia

Abstract

In 2010, Robert M. Lloyd wrote, “In an ideal world, a court would be able to hear the evidence, estimate the plaintiff’s damages, and quantify its own confidence that the estimate was accurate.”  This presentation argues that Bayesian networks can move the legal world very close to Lloyd’s ideal. Using an actual court case, this presentation demonstrates how expert witnesses can use Bayesian belief networks (BBNs) to estimate economic damages with "reasonable certainty" as required by case law, challenges the mythology that point estimates offer higher certainty than value ranges, and illustrates how courts, arbitrators, and negotiators can use BBNs to "quantify their own confidence" in damages estimates.