Questions / Quant trading, Information & Bayes
Which urn produced the draw?
Choose urn A or B with equal probability. A contains 3 red and 1 blue token; B contains 1 red and 3 blue. You draw red. What is P(A | red), as a percentage?
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Answer: 75% (3/4)
- Bayes gives 0.5 × 0.75 / (0.5 × 0.75 + 0.5 × 0.25) = 75%.
Interview shortcut. A red is 3 times as likely from A: even odds become 3:1, so 75%.
In the app this has a follow-up where one thing about the setup changes. Try the follow-up.