Prior Elicitation, Assessment and Inference with a Dirichlet Prior

Methods are developed for eliciting a Dirichlet prior based upon stating bounds on the individual probabilities that hold with high prior probability. This approach to selecting a prior is applied to a contingency table problem where it is demonstrated how to assess the prior with respect to the bias it induces as well as how to check for prior-data conflict. It is shown that the assessment of a hypothesis via relative belief can easily take into account what it means for the falsity of the hypothesis to correspond to a difference of practical importance and provide evidence in favor of a hypothesis.