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FRIDAY'S KILLER QUESTION: There was a hit and run incident involving a taxi...

Every Friday we'll be posting challenging and cryptic questions for you to answer, provided for us by 7city Learning. Post your answers in the comments box at the bottom of the page. Maximum kudos will be provided to the person who provides the correct answer first.

We'll add the correct answer to the bottom of this article on Monday morning.

There was a hit-and-run incident involving a taxi in a city in which 85% of the taxis are green and the remaining 15% are blue. There was a witness to the crime who says that the hit-and-run taxi was blue. Unfortunately this witness is only correct 80% of the time. What is the probability that it was indeed a blue car that hit our victim?

ANSWER:

Suppose that we have 100 such incidents. In 85 of these the taxi will have been green and 15 blue, just based on random selection of taxi colour. In the cases where the taxi was green the witness will mistakenly say that the car is blue 20% of the time, i.e. 7 times. In the 15 blue cases the witness will correctly say blue 80% of the time, i.e. 12 times. So although there were only 15 accidents involving a blue taxi there were 29 reports of a blue taxi being to blame, and most of those (17 out of 29) were in error. These are the so-called positive one gets in medical tests.

Now given that we were told it was a blue taxi, what is the probability that it was a blue taxi? That's just 12/29 or 41.4%.

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AUTHOR7cityLearning Insider Comment
  • pu
    punctualdude
    9 November 2010

    Seriously if a trader sells at 41% he is sure to loose.
    it will sell 41% and buy 80%....
    You should not consider 100 accidents but 100 witnesses because the information comes from the witness not the accident itself.
    Statistics are stupid, Nassim Taleb is great.

  • pu
    punctualdude
    9 November 2010

    lol making probabilities from independent events....how fun!
    Any trader would be selling at 41.4%?

  • Sa
    Sarah, Editor, eFinancialCaree
    8 November 2010

    @boyfriend - I wasn't aware we were romantically involved.

  • Sa
    Sarahs_boyfriend
    8 November 2010

    @Sarah, how come you ignored me when im your boyfriend? Im upset now

  • Sa
    Sarah, Editor, eFinancialCaree
    8 November 2010

    @punctualdude - 4pm

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