Sale price above 15000 given a 9000 reserve
Question
A seller accepts the first offer of $9000 or more for his car. Offers are i.i.d. exponential with mean $5000. Conditional on the car being sold, the probability that the sale price is at least $15000 can be written as with rational. Find .
Short answer
. The accepted bid is distributed as a bid conditioned on exceeding $9000. By memorylessness, .
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Open the worked solutionLessons behind this question
- Continuous Random Variables and Probability Density Functions
- Conditional Probability, Total Probability, and Bayes' Rule
- Worked Examples — Probability Trees, Monty Hall, and Bayesian Updating
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