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Nearly all reasoning and decision making takes place in the presence of some uncertainty. Signal detection theory provides a precise language and graphic notation for analyzing decision making in the presence of uncertainty and also shows procedures for interpreting occurrence, criterion, and possible outcomes. For example, imagine that a radiologist examines a computerized tomography (CT) scan, looking for evidence of a lung tumor. Interpreting CT images is difficult and requires a lot of training. There is some uncertainty as to what is there or not. Is that white patch a tumor? If the radiologist offers the opinion that there is no tumor and is wrong, there could be grave consequences for the patient. Then again, if the radiologist incorrectly indicates there is a tumor, the ...

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