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Guilt in decision making. The Journal of Behavioral Decision Making (January 2007) published a study of how guilty feelings impact on-the-job decisions. In one experiment, 57 participants were assigned to a guilty state through a reading/writing task. Immediately after the task, the participants were presented with a decision problem where the stated option had predominantly negative features (e.g., spending money on repairing a very old car). Of these 57 participants, 45 chose the stated option. Suppose 10 of the 57 guilty-state participants are selected at random. Define x as the number in the sample of 10 who chose the stated option.

a. Find P ( X = 5 ).

b. Find P ( X = 8 ).

c. What is the expected value (mean) of x?

Short Answer

Expert verified

a.PX=5=0.0224b.PX=8=0.3294c.Theexpectedvalue(mean)ofxisnrN

Step by step solution

01

Given information

By the Journal of Behavioral Decision Making (January 2007),

x is a random variable that takes the number of participants who chose the stated.

57 participants were assigned to a guilty state, i.e.N = 57,

45 are chosen from 57 participants, i.e.r = 45,

10 is the number of samples chosen in 57 participants, i.e., n = 10

x follows a hypergeometric distribution with N = 57, n = 10 and r = 45

02

Finding the probability

a.

The probability of x given by,

Px=rxN-rn-xNnHere,x=5,N=57,n=10andr=45Px=rxN-rn-xNn=45557-4510-55710=4551255710=1221759x79243183019880=0.0224Px=5=0.0224

Therefore, the probability is 0.0224

03

Finding the probability

b.

The probability of x given by,

Px=rxN-rn-xNn

Here,

x=8,N=57,n=10andr=45Px=8=r8N-rn-8Nn=45857-4510-85710=4581225710=215553195x6643183019880=0.3294PX=8=0.3294

Therefore, the probability is 0.3294

04

Finding the expected value (mean)

c.

The expected value (mean) of x is given by,

Ex=x=0nxPX=x=x=0nxrxN-rn-xNn=rNnx=1nr-1x-1N-rn-x=rNny=0nAyN-A-1m-yA=r-1,y=x-1,m=n-1=rNnN-1m=rNnN-1n-1=rN!n!N-n!(N-1)!n-1!N-n!=rN(N-1)!nn-1!N-n!(N-1)!n-1!N-n!=nxrxn-1!xN-n!NxN-1!x(N-1)!n-1!xN-n!=nrNEx=nrN

Therefore, the expected value (mean) of x is nrN

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Most popular questions from this chapter

Stock market participation and IQ. Refer to The Journal of Finance (December 2011) study of whether the decision to invest in the stock market is dependent on IQ, Exercise 3.46 (p. 182). Recall that an IQ score (from a low score of 1 to a high score of 9) was determined for each in a sample of 158,044 Finnish citizens. Also recorded was whether or not the citizen invested in the stock market. The accompanying table gives the number of Finnish citizens in each IQ score/investment category. Which group of Finnish citizens (market investors or noninvestors) has the highest average IQ score?

IQ Score

Invest in market

No investment

Totals

1

893

4659

5552

2

1340

9409

10749

3

2009

9993

12002

4

5358

19682

25040

5

8484

24640

33124

6

10270

21673

31943

7

6698

11260

17958

8

5135

7010

12145

9

4464

5067

9531

Totals

44651

113393

158044

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