Econ 300 Econometrics Spring 2018 Homework 1 Due Date Friday

Econ 300 Econometrics Spring 2018 Homework 1 Due Date: Friday, February 2d, at the beginning of class Name: 1. You are a manager of an NBA team that is going to the playoffs. You would like to trade for a good free throw shooter in case a game comes down to making free throws. You have narrowed your list down to two candidates, Jason and Terrell, Jason has an 80% chance of making his first free throw. If he makes his first free throw, he has an 80% chance of making his second free throw. If he misses his first free throw, he only has a 40% chance of making his second free throw. Terrell has a 70% chance of making his first free throw. If he makes his first free throw, he has an 85% chance of making his second free throw. If he misses his first free throw, he has a 70% chance of making his second free throw. Who would you pick? Explain.

Solution

We will find the probability of getting atleast one success

For Jason = Prob(making both)+Prob(Missing one) = 0.8*0.8 + 0.2*0.4 = 0.72

For Terrell = Prob(making both)+Prob(Missing one) = 0.7*0.85 + 0.3*0.7 = 0.805

Terrell has the higher probability of getting at least one success so we will choose Terrell