Refer to the following payoff table:

There is an option of paying $100 to have research done to better predict which state of nature will occur. When the true state of nature is S1, the research will accurately predict S1 60% of the time. When the true state of nature is S2, the research will accurately predict S2 80% of the time.
What is the posterior probability of S1 given that the research predicts S1?
A) 0.18
B) 0.44
C) 0.57
D) 0.65
E) 0.82

Question

Refer to the following payoff table:

There is an option of paying $100 to have research done to better predict which state of nature will occur. When the true state of nature is S1, the research will accurately predict S1 60% of the time. When the true state of nature is S2, the research will accurately predict S2 80% of the time.
What is the posterior probability of S1 given that the research predicts S1?
A) 0.18 
B) 0.44 
C) 0.57 
D) 0.65 
E) 0.82

Quizplus · Accepted Answer

The Answer of Refer to the following payoff table:

There is an option of paying $100 to have research done to better predict which state of nature will occur. When the true state of nature is S1, the research will accurately predict S1 60% of the time. When the true state of nature is S2, the research will accurately predict S2 80% of the time.
What is the posterior probability of S1 given that the research predicts S1?
A) 0.18 
B) 0.44 
C) 0.57 
D) 0.65 
E) 0.82

Refer to the Following Payoff Table