MATLAB: Kahneman’s Taxi problem

kahneman's taxi problem

Can someone sugest how to create a simulation of Kahneman's taxi problem?

Best Answer

  1. Generate a cab of one color or the other with the appropriate probabilities.
  2. Get the color ID response from the witness with the appropriate probability.
  3. Record the actual cab color and the color ID response.
Iterate steps 1-3 10,000 times.
From the 10,000 iterations, select all the ones where the color ID response was blue. Say there are N of these.
Find out what proportion of those N times the actual cab color was blue.
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