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Recovering a coin bias from a posterior odds ratio

Question

Two biased coins have heads probabilities p1p_1 and p2p_2, both strictly between 00 and 11, with p1+p2=1p_1+p_2=1 and p2>p1p_2>p_1. You pick one of the two coins at random (each with probability 12\tfrac12) and toss it twice, getting heads both times. Given this, coin 2 is now four times as likely as coin 1 to be the one you picked. Find p2p_2.

Short answer

p2=23p_2=\tfrac23. With equal priors the posterior odds equal the likelihood ratio, so p22=4p12=4(1−p2)2p_2^2=4p_1^2=4(1-p_2)^2. Taking the positive root, p2=2(1−p2)p_2=2(1-p_2), so p2=23p_2=\tfrac23.

Adapted from QuantQuestions.io; question and answer rewritten by SelfMadeQuant.com.

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