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prior probabilities.

Then, from a sample, special report, or a product

test we obtain some additional information.

Given this information, we calculate revised or

posterior probabilities.

Bayes’ theorem provides the means for revising the

prior probabilities.

Application

Prior New Posterior

of Bayes’

Probabilities Information Probabilities

Theorem

Bayes’ Theorem

To find the posterior probability that event Ai will

occur given that event B has occurred, we apply

Bayes’ theorem.

P( Ai )P( B| Ai )

P( Ai |B)

P( A1 )P( B| A1 ) P( A2 )P( B| A2 ) ... P( An )P( B| An )

which we want to compute posterior probabilities

are mutually exclusive and their union is the entire

sample space.

Example- An insurance company insured 2000

scooter drivers, 4000 car drivers and 6000 truck

drivers. The probability of an accident involving

a scooter driver, a car driver and truck driver is

0.01, 0.03 and 0.15 respectively. One of the

insured person met with an accident. What is

the probability that he is a scooter driver.

2000 scooter drivers=> P(S)= 2000/12000

4000 car drivers => P(C)= 4000/12000

6000 truck drivers => P(T)= 6000/12000

driver, a car driver and truck driver is 0.01, 0.03 and

0.15

P(A|S)=0.01, P(A|C)=0.03 and P(A|T)=0.15

one of the insured person met with an accident.

What is the probability that he is a scooter driver.

P(S|A)= ?

What is the probability that he is a scooter driver.

P(S|A)= ?

𝑃 𝑆 𝑃 𝐴𝑆

𝑃 𝑆𝐴 =

𝑃 𝑆 𝑃 𝐴 𝑆 +𝑃 𝐶 𝑃 𝐴 𝐶 +𝑃 𝑇 𝑃 𝐴 𝑇

(2/12) ∗ (1/100)

2/12 ∗ (1/100) + (4/12) ∗ (3/100) + (6/12) ∗ (15/100)

= 2/104

What is the probability that he is a Car driver.

P(C|A)= ?

What is the probability that he is a truck driver.

P(T|A)= ?

Ex.2

A factory produces 3 machines, A, B and C

producing 1000, 2000 and 3000 bolts per day

respectively.

It is found that A produces 1% defective, B produces

2 % defective and C produces 3% defectives.

If a bolt is chosen at the end of the day and found

defective what is the probability that it came from

machine A

P(A)=1/6, P(B)= 2/6, and P(C)= 3/6

It is found that A produces 1% defective

=>P(D|A)=1/100

B produces 2 % defective

=>P(D|B)=2/100

and C produces 3% defectives

=>P(D|C)=3/100

If a bolt is chosen at the end of the day and

found defective what is the probability that it

came from machine A

=> P(A|D)

P(A|D)

𝑃 𝐴 𝑃 𝐷𝐴

𝑃 𝐴 𝐷 =

𝑃 𝐴 𝑃 𝐷𝐴 +𝑃 𝐵 𝑃 𝐷𝐵 +𝑃 𝐶 𝑃 𝐷𝐶

𝑃 𝐴 𝐷 =

1

∗1/100

6

1 2 =1/14

∗1/100+ 2/100+(3/6)∗3/100

6 6

𝑃 𝐵 𝐷 =?

𝑃 𝐶 𝐷 =?

• Sample Problem

• Bayes' theorem can be best understood through an

example. This section presents an example that

demonstrates how Bayes' theorem can be applied

effectively to solve statistical problems.

• Example 1

x is getting married tomorrow, at an outdoor ceremony in

the desert. In recent years, it has rained only 5 days each

year. Unfortunately, the weatherman has predicted rain for

tomorrow. When it actually rains, the weatherman

correctly forecasts rain 90% of the time. When it doesn't

rain, he incorrectly forecasts rain 10% of the time. What is

the probability that it will rain on the day of x's wedding?

• Solution: The sample space is defined by two mutually-

exclusive events - it rains or it does not rain. Additionally, a

third event occurs when the weatherman predicts rain.

Notation for these events appears below.

• Event A1. It rains on x's wedding.

• Event A2. It does not rain on x's wedding.

• Event B. The weatherman predicts rain.

• In terms of probabilities, we know the following

:P( A1 ) = 5/365 =0.0136985 [It rains 5 days out of

the year.]

• P( A2 ) = 360/365 = 0.9863014 [It does not rain

360 days out of the year.]

• P( B | A1 ) = 0.9 [When it rains, the weatherman

predicts rain 90% of the time.]

• P( B | A2 ) = 0.1 [When it does not rain, the

weatherman predicts rain 10% of the time.]

We want to know P( A1 | B ), the probability it will rain on

the day of x's wedding, given a forecast for rain by the

weatherman. The answer can be determined from

Bayes' theorem, as shown below.

P( A1 | B ) = P( A1 ) P( B | A1 )

P( A1 ) P( B | A1 ) + P( A2 ) P( B | A2 )

P( A1 | B ) =(0.014)(0.9) / [ (0.014)(0.9) + (0.986)(0.1) ]

P( A1 | B ) =0.111

Note the somewhat unintuitive result. Even when the

weatherman predicts rain, it only rains only about 11%

of the time. Despite the weatherman's gloomy

prediction, there is a good chance that x will not get

rained on at her wedding.

Bayes’ Theorem

Example: L. S. Clothiers

A proposed shopping center will provide strong

competition for businesses like L. S.Clothiers. If

the shopping center is built, the owner of L. S.

Clothiers feels it would be best to relocate to

the shopping center.

The shopping center cannot be built unless a

zoning change is approved by the town council.

The planning board must first make a

recommendation, for or against the zoning change,

to the council.

Prior Probabilities

Example: L. S. Clothiers

Let:

A1 = town council approves the zoning change

A2 = town council disapproves the change

New Information

Example: L. S. Clothiers

The planning board has recommended against

the zoning change. Let B denote the event of a

negative recommendation by the planning board.

revise the probabilities that the town council will

approve or disapprove the zoning change?

Conditional Probabilities

Example: L. S. Clothiers

Past history with the planning board and the town

council indicates the following:

P(B|A1) = .2 P(B|A2) = .9

Tree Diagram

Example: L. S. Clothiers

Outcomes

P(B|A1) = .2

P(A1 B) = .14

P(A1) = .7

c

P(B |A1) = .8 P(A1 Bc) = .56

P(B|A2) = .9

P(A2 B) = .27

P(A2) = .3

c

P(B |A2) = .1 P(A2 Bc) = .03

Bayes’ Theorem

To find the posterior probability that event Ai will

occur given that event B has occurred, we apply

Bayes’ theorem.

P( Ai )P( B| Ai )

P( Ai |B)

P( A1 )P( B| A1 ) P( A2 )P( B| A2 ) ... P( An )P( B| An )

which we want to compute posterior probabilities

are mutually exclusive and their union is the entire

sample space.

Posterior Probabilities

Example: L. S. Clothiers

Given the planning board’s recommendation not

to approve the zoning change, we revise the prior

probabilities as follows:

P( A1 )P( B| A1 )

P( A1 |B)

P( A1 )P( B| A1 ) P( A2 )P( B| A2 )

(. 7 )(. 2 )

(. 7 )(. 2 ) (. 3)(. 9)

= .34

Posterior Probabilities

Example: L. S. Clothiers

The planning board’s recommendation is good

news for L. S. Clothiers. The posterior probability of

the town council approving the zoning change is .34

compared to a prior probability of .70.

Bayes’ Theorem: Tabular Approach

Example: L. S. Clothiers

• Step 1

Prepare the following three columns:

Column 1 - The mutually exclusive events for

which posterior probabilities are desired.

Column 2 - The prior probabilities for the events.

Column 3 - The conditional probabilities of the

new information given each event.

Bayes’ Theorem: Tabular Approach

Example: L. S. Clothiers

• Step 1

(1) (2) (3) (4) (5)

Prior Conditional

Events Probabilities Probabilities

Ai P(Ai) P(B|Ai)

A1 .7 .2

A2 .3 .9

1.0

Bayes’ Theorem: Tabular Approach

Example: L. S. Clothiers

• Step 2

Prepare the fourth column:

Column 4

Compute the joint probabilities for each event and

the new information B by using the multiplication

law.

Multiply the prior probabilities in column 2 by

the corresponding conditional probabilities in

column 3. That is, P(Ai IB) = P(Ai) P(B|Ai).

Bayes’ Theorem: Tabular Approach

Example: L. S. Clothiers

• Step 2 (continued)

We see that there is a .14 probability of the town

council approving the zoning change and a

negative recommendation by the planning board.

There is a .27 probability of the town council

disapproving the zoning change and a negative

recommendation by the planning board.

Bayes’ Theorem: Tabular Approach

Example: L. S. Clothiers

– Step 3

Sum the joint probabilities in Column 4. The

sum is the probability of the new information,

P(B). The sum .14 + .27 shows an overall

probability of .41 of a negative recommendation

by the planning board.

Bayes’ Theorem: Tabular Approach

Example: L. S. Clothiers

• Step 4

Prepare the fifth column:

Column 5

Compute the posterior probabilities using the

basic relationship of conditional probability.

P( Ai B)

P( Ai | B)

P( B)

The joint probabilities P(Ai I B) are in column 4

and the probability P(B) is the sum of column 4.

Bayes’ Theorem: Tabular Approach

Example: L. S. Clothiers

• Step 4

(1) (2) (3) (4) (5)

Prior Conditional Joint Posterior

Events Probabilities Probabilities Probabilities Probabilities

Ai P(Ai) P(B|Ai) P(Ai I B) P(Ai |B)

A1 .7 .2 .14 .3415

A2 .3 .9 .27 .6585

1.0 P(B) = .41 1.0000

.14/.41

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