Conditional probabilities
Prior Probabilities
P(Pilot works | Facility works) = 0.80 P(Facility works) = 0.60
P(Pilot fails | Facility works) =
0.20
P(Facility fails) =
0.40
Problem 8-35
Posterior probabilities GIVEN pilot fails
P(Pilot fails) =
0.46
0.89
Facility works
0.60 Facility fails
Pilot works -$885,000
0.26
-$60,000 $246,000 Facility works
0.40 Facility fails
Pilot fails -$885,000
0.60
Facility works
$675,000
Problem 8-35