Questions 4-5 deal with the following information: GloboSnax has an overall 10% success rate when introducing new products.  (Suppose success here means a product achieves a certain target market share within 2 years of its introduction.)   Before roll-out, a secret forecasting committee assesses each new product, and calls it a “winner” or “loser.”  In the past, the committee has done reasonably well in distinguishing between successful and unsuccessful products: 90% of products that went on to succeed were correctly called “winners” by the committee. 70% of products that went on to fail were correctly called “losers” by the

MATLAB: An Introduction with Applications
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Questions 4-5 deal with the following information:

GloboSnax has an overall 10% success rate when introducing new products.  (Suppose success here means a product achieves a certain target market share within 2 years of its introduction.)  

Before roll-out, a secret forecasting committee assesses each new product, and calls it a “winner” or “loser.”  In the past, the committee has done reasonably well in distinguishing between successful and unsuccessful products:

  • 90% of products that went on to succeed were correctly called “winners” by the committee.
  • 70% of products that went on to fail were correctly called “losers” by the committee.

A new product, CocoChips is evaluated and labeled a “winner” by the committee. 

4. Based on the information available, calculate the probability that CocoChips will succeed, given the “winner” classification from the forecasting committee. (Hint: you can use a 2x2 table, and/or Bayes Rule formula to help compute your answer.)

 

 

5. What would be a plausible intuitive probability judgment for the quantity in question 4 from someone exhibiting base-rate neglect?   

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