Chris recommends her friend to her supervisor for a job. To make her recommendation credible, she can design a test for her friend to take. She can choose the difficulty level of the test by choosing the following two parameters: X = Pr(pass|skilled), and y= Pr(pass|unskilled) Without the test, Chris’ friend is believed (by both Chris and her supervisor) to be skilled with probability 0.1. If a skilled candidate is hired, the supervisor gets a payoff of 20. If an unskilled candidate is hired, the supervisor gets a payoff of -10, If no one is hired, the supervisor’s payoff is 0. Chris wants to maximize the probability of her friend being hired. (a) Would the supervisor hire Chris’ friend without the test? (b)  How would Chris design this test? In other words, what is theoptimal value of x and y?

A First Course in Probability (10th Edition)
10th Edition
ISBN:9780134753119
Author:Sheldon Ross
Publisher:Sheldon Ross
Chapter1: Combinatorial Analysis
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Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...
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Chris recommends her friend to her supervisor for a job. To make her recommendation credible, she can design a test for her friend to take. She can choose the difficulty level of the test by choosing the following two parameters:

X = Pr(pass|skilled), and y= Pr(pass|unskilled)

Without the test, Chris’ friend is believed (by both Chris and her supervisor) to be skilled with probability 0.1.

If a skilled candidate is hired, the supervisor gets a payoff of 20. If an unskilled candidate is hired, the supervisor gets a payoff of -10, If no one is hired, the supervisor’s payoff is 0. Chris wants to maximize the probability of her friend being hired.

(a) Would the supervisor hire Chris’ friend without the test?

(b)  How would Chris design this test? In other words, what is theoptimal value of x and y?

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