MS&E 107 Lecture Notes - Lecture 12: State Variable, Venn Diagram
4 Nov 2016
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Venn diagram - 2 overlapping circles one for shd+ and another for positive test result. P(test positive | shd+) = area of intersection / area of black circle. P(shd+ | test positive) = area of intersection of almond / area of green circle. P(test positive | shd+) = pp(test positive and shd+) / p(shd+) We need to know prevalence of terrorists in general population - estimate around % of people are terrorists. Two schools: podunk state and stanford university. If build many - built 1000, if few, built 500. Do not know what price is - uncertainty in tree denoted by * We either have high price or low price to sell (equally likely with 50% each) If large quantity built, price is much lower. If built few, then price is much higher. If built few, on average i will make 22500.
