A potential buyer is trying to decide if a new motorcycle is…

A potential buyer is trying to decide if a new motorcycle is good or bad. The prior belief that the motorcycle is good is 50%. Then the potential buyer receives signals (test rides), where g represents a good test ride performance and b represents a bad test ride performance by the motorcycle. Also good motorcycles perform well on test rides and bad motorcycles ride poorly on test rides with 60% probability. Given that the potential buyer goes on a single good test ride, followed by two bad test rides, what is her posterior probability that the motorcycle is a good one?

Sam lives for three periods: youth, middle age, and old age….

Sam lives for three periods: youth, middle age, and old age. In each period, he chooses whether to eat chocolate or not. Once Sam tries it, he becomes addicted in the next period and remains addicted forever. Assume that, in youth, Sam is not addicted to chocolate. Sam’s utility depends on the state of addiction: U ( eating chocolate | addicted ) = -4 U ( eating chocolate | not addicted ) = 4 U ( not eating chocolate | addicted ) = -10 U ( not eating chocolate | not addicted ) = 2 Assume delta = 0.5 (