A generalization of the hierarchy in Exercise 4.34 is described by D. G. Morrison (1978), who gives
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p = probability that a person can actually discriminate,
c = probability that a person discriminates correctly.
Then
where 1/2(1 - p) is the probability that a person guesses correctly. We now run the experiment and observe X1,..., Xn ~ Bernoulli(c), so
However, it is probably the case that p is not constant from person to person, so p is allowed to vary according to a beta distribution,
P ~ beta(a, b).
(a) Show that the distribution of EXi is beta-binomial.
(b) Find the mean and variance of EXi.
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...
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