Bayes Theorem

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Bayes Theorem1 is a logical extension of the conditional probability arguments we looked at in the Venn diagram section. We saw that:

and

Since    :

Hence:  which is Bayes Theorem

and, in general,

The following example illustrates the use of this equation. Many more are given in the section on Bayesian inference.

Example

Three machines A, B and C produce 20%, 45% and 35% respectively of a factory's wheel nuts output. 2%, 1% and 3% respectively of these machines outputs are defective.

a) What is the probability that any wheel nut randomly selected from the factory's stock will be defective? Let X be the event that the wheel nut is defective and A, B, and C be the events that the selected wheel nut came from machines A, B and C respectively:

P(X)     = P(A). P(X/A)+P(B). P(X/B)+P(C). P(X/C)

            = (0.2).(0.02)+(0.45.)(0.01)+(0.35).(0.03)

            = 0.019

b) What is the probability that a randomly selected wheel nut comes from machine A if it is defective?

From Bayes Theorem,

In other words, in Bayes Theorem we divide the probability of the required path (probability that it came from machine A and was defective) by the probability of all possible paths (probability that it came from any machine and was defective).

Read on:  Binomial Theorem