Exercise


May 08'23

Answer

Solution: D

Consider three cases, one for each result of the first interview.

Independent (prob 0.5): Expected absolute difference is (4/9)(0) +(5/9)(1) = 5/9

Republican (prob =0.3): Expected absolute difference is (2/9)(0) + (5/9)(1) + (2/9)(2) = 1

Democrat (prob = 0.2): Expected absolute difference is (3/9)(0) + (5/9)(1) + (1/9)(2) = 7/9.

The unconditional expectation is 0.5(5/9) + 0.3(1) + 0.2(7/9) = 6.6/9 = 11/15.

Alternatively, the six possible outcomes can be listed along with their probabilities and absolute differences.

Copyright 2023. The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.

00