Credibility theory is a concept within actuarial science and statistics used primarily in the fields of insurance and risk management. It focuses on how to weigh and combine different sources of information or data to make predictions about future claims or risks. The primary goal of credibility theory is to improve the accuracy of estimates based on limited data. ### Key Concepts in Credibility Theory: 1. **Credibility**: This refers to the weight of the information derived from past experience or data in predicting future outcomes.
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