If the dealer employs the services of the authenticator, and she indicates the painting is genuine, what is the chance it is actually a forgery? b) Without authentication, the dealer can sell the painting for $20,000. The price would increase to $25,000 if the painting were authenticated as genuine, but obviously it is worthless if it is deemed a forgery. The authenticator charges $2,000 for her services. Do you think it is worth it for the dealer to use the authenticator? Why or why not?
An art authenticator has a history of successfully identifying forgeries. Over her career, she has been asked to evaluate 74 actual forgeries and correctly identified 69 of them. Further, among all the authentic art she has looked at, she has never claimed any to be forgeries. An art dealer is considering purchasing a painting but is worried it is a fake. His experience in the field over the years indicates about 3% of the artwork he comes across is forged.
a) If the dealer employs the services of the authenticator, and she indicates the painting is genuine, what is the chance it is actually a forgery?
b) Without authentication, the dealer can sell the painting for $20,000. The price would increase to $25,000 if the painting were authenticated as genuine, but obviously it is worthless if it is deemed a forgery. The authenticator charges $2,000 for her services. Do you think it is worth it for the dealer to use the authenticator? Why or why not?
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