To understand this section, you should be familiar with conditional probability. Press the "prev" button on the sidebar or press here to go to a tutorial on conditional probabilty.

Bayes' theorem gives us a way of calculating P(E|F) from a knowledge of P(F|E).

Example
      E = the event that an anabolic steroid detection test gives a positive result
      F = the event that the athlete uses steroids
then
      P(E|F) = probability that the test is positive for an athlete who uses steroids.
      P(F|E) = probability that an athlete uses steroids given that the test is positive.

A manufacturer claims that its drug test will detect steroid use (that is, show positive for an athlete who uses steroids) 95% of the time. Your friend on the rugby team has just tested positive. The probability that he uses steroids is:

	.95			At most .95
	At least 0.95			.655
	.875			Not possible to say, based on the information

Question
What information do we need to calculate P(F|E) from a knowledge of P(E|F)?

Answer
Two additional pieces of information: we need to know P(F) (the probability that an athlete on the team is using steroids) and P(E|F') (the probability of a false positive result).

A manufacturer claims that its drug test will detect steroid use (that is, show positive for an athlete who uses steroids) 95% of the time. What the company does not tell you is that 15% of all steroid-free individuals also test positive (the false positive rate). 10% of the rugby team members use steroids. Take

      E = the event that a rugby team member tests positive
      F = the event that a rugby team member uses steroids

Complete the following chart and press "Check" to check each answer:

Now select the correct tree from the following choices.

Key:		uses steroids		does not use steroids
		tests positive		tests negative

B B		B B
B B		B B

Here is the information again: A manufacturer claims that its drug test will detect steroid use (that is, show positive for an athlete who uses steroids) 95% of the time. Further, 15% of all steroid-free individuals also test positive. 10% of the rugby team members use steroids. Your friend on the rugby team has just tested positive. The probability that he uses steroids is? (Refer to the tree to calculate the answer.)

0.4130

0.8636

0.0950

0.2300

Notice that, in the calculation we just finished, we computed P(F|E) from the probability tree, using information such as P(E|F) and P(E|F'). If you press the "HELP" button immediately above, you will find that we used the following calculation.

Note
There is an "extended" form of Bayes' Theorem. Consult Section 7.6 in Finite Mathematics and Finite Mathematics and Applied Calculus for a discussion of the extended form of Bayes' theorem.

As accounts manager in your company, you classify 75% of your customers as "good credit" and the rest as "risky credit" depending on their credit rating. Customers in the "risky" category allow their accounts to go overdue 50% of the time on average, whereas those in the "good" category allow their accounts to become overdue only 10% of the time. What percentage of overdue accounts are held by customers in the "risky credit" category?

20%

12.5%

93.75%

62.5%

Now try some of the questions in the true/false quiz (warning: it covers the whole of Chapter 7) by pressing the button on the sidebar, or try some of the exercises in Section 7.6 of Section 7.6 in Finite Mathematics and Finite Mathematics and Applied Calculus.