70. In a classic oil-drilling example, you are trying todecide whether to drill for oil on a field that mightor might not contain any oil. Before making thisdecision, you have the option of hiring a geologist to perform some seismic tests and then predictwhether there is any oil or not. You assess that ifthere is actually oil, the geologist will predict there isoil with probability 0.85. You also assess that if thereis no oil, the geologist will predict there is no oil withprobability 0.90. Why will these two probabilities notappear on the decision tree? Which probabilities willbe on the decision tree?
Contingency Table
A contingency table can be defined as the visual representation of the relationship between two or more categorical variables that can be evaluated and registered. It is a categorical version of the scatterplot, which is used to investigate the linear relationship between two variables. A contingency table is indeed a type of frequency distribution table that displays two variables at the same time.
Binomial Distribution
Binomial is an algebraic expression of the sum or the difference of two terms. Before knowing about binomial distribution, we must know about the binomial theorem.
70. In a classic oil-drilling example, you are trying to
decide whether to drill for oil on a field that might
or might not contain any oil. Before making this
decision, you have the option of hiring a geologist to perform some seismic tests and then predict
whether there is any oil or not. You assess that if
there is actually oil, the geologist will predict there is
oil with probability 0.85. You also assess that if there
is no oil, the geologist will predict there is no oil with
probability 0.90. Why will these two probabilities not
appear on the decision tree? Which probabilities will
be on the decision tree?
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