The cab problem
A city's cabs are 85% Green and 15% Blue. A witness identifies a cab involved in an accident as Blue. Tested under similar conditions, the witness is correct 80% of the time. What is the probability the cab was actually Blue? Give your answer as a decimal (to 2 decimals).
Show hints (2)+
- Both a Blue cab seen correctly and a Green cab misidentified produce a “Blue” report.
- Weight each by its base rate before normalizing.
Answer
Reveal answer →Final answer
0.41 (± 0.01)
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Interview format: Hedge Fund Quant, Systematic & Data-Driven Trading