Able Construction: A Spreadsheet Activity for Teaching Bayes’ Theorem

Abstract

Using classroom activities to motivate the teaching and learning of Bayes’ theorem is not new. However, many of the textbook exercises and published simulations gloss over how the requisite probabilities are determined. In our case study, Able Construction is a fictional company hoping to exploit historical bidding data to inform its own bidding strategy on a municipal construction project. Unlike most other classroom activities, we challenge students to calculate the necessary probabilities directly from a given dataset. In our experience with implementing this case in introductory business analytics courses at the undergraduate- and graduate-level, we find that this spreadsheet activity gives students the opportunity to exercise their own judgement regarding data manipulation and definition of states of nature. This autonomy in analysis develops in students a deeper appreciation for practical skills required for possible analytics careers after graduation, and leads to engaging discussions of the applicability of Bayes’ theorem in practice.