Week 3.docx - Week 3 Bayes’ Rule o Applied in market segmentation hiring choices financial modeling green lighting new decisions o Table Approach o nt

# Week 3.docx - Week 3 Bayes’ Rule o Applied in market...

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Week 3 Bayes’ Rule o Applied in market segmentation, hiring choices, financial modeling, green lighting new decisions o Table Approach o Eve nt o Pri or probability o P( E i ) o Conditio nal probability o P(d| E i ) o Joint probability P(E i ∩ d) o o o >= 650 o 0/1 o 0.52 o 0.1x0.52 =0.0 52 o 0.052 / ( 0.052+0.207)= 0.201 o < 650 o 0.9 o 0.23 o 0.9x0.23= 0.2 07 o 0.207 / 0.052+0.207 )=0. 799 o Probability (Decision) Tree Approach Chapter 5 discrete distributions Distinguish between discrete random variables and continuous random variables o Random variable Variable containing the outcomes of a chance or experiment o Continuous random variable - takes on values at every point over a given interval Weight of a person Elapsed time between arrivals of bank customers Percent of the labor force that is unemployed o Discrete random variable - set of all possible values is a finite or a countably infinite number of possible values Number of new subscribers to a magazine Number of bad checks received by a restaurant Number of absent employees on a given day 0 ≤P ( x )

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