[Math] “What is the probability that this customer is one of the careful customers?”

probability

The acme insurance company has two types of customers, careful and reckless. A careful customer has an accident during the year with probability 0.01. A reckless customer has an accident during the year with probability 0.04. 80% of the customers are careful and 20% of the customers are reckless. Suppose a randomly chosen customer has an accident this year. What is the probability that this customer is one of the careful customers?

Here is my solution: Denote A1= {careful customer has accident}, A2= {reckless customer has accident}, B1= {customer is careful}, B2= {customer is reckless}. So we need to find P(customer is careful given the fact that customer had an accident) = P(B1|(A1⋃A2) = P(careful customer has accident)/P(customer has accident) = P(A1)/(P(A1)+P(A2)) = 0,01/(0,01+0,04) = 0,2. I looked up at the answers and they didn't match. The other thing that confuses me is that I didn't use the P(B1) and P(B2). Maybe I misunderstood the question and my solution is wrong?

Best Answer

This problem concerns Bayes Theorem.

The total probability that a random person has an accident in the given year is $$.8\times .01+.2\times .04=0.016$$

The portion of that which is explained by careful drivers is $.8\times .01=.08$. Thus the answer is $$\frac {.8\times .01}{.8\times .01+.2\times .04}=.5$$

Thus it is equally likely that your accident victim was careful or careless.

Speaking informally, that's because, while it's four times more likely that a randomly selected driver is careful, it is one fourth as likely that a careful driver will have an accident, and the two factors of four cancel.