Witness says the cab was blue
Question
In a town of cabs are green and the remaining are blue. After a hit-and-run, a witness reports that the cab was blue. Tests show the witness identifies cab colour correctly of the time. Given the report, how likely is it that the cab really was blue?
Short answer
. By Bayes, . The low base rate of blue cabs outweighs the witness's reliability.
Adapted from Wilmott, Frequently Asked Questions in Quantitative Finance, ch. 10 brainteaser 'Hit-and-run taxi', p.352; question and answer rewritten by SelfMadeQuant.com.
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Open the worked solutionLessons behind this question
- Worked Examples — Probability Trees, Monty Hall, and Bayesian Updating
- Conditional Probability, Total Probability, and Bayes' Rule
- Sample Spaces, Events, and the Probability Axioms
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