3. A person is on trial (i.e., a defendant) for a serious crime. After several days in court, the jury has decided to convict this person and send them to life in prison. However, we know that juries are not always accurate in determining the guilt/innocence in their decision to convict/acquit defendants. As such, there is still a possibility that this person is innocent. Using Bayes' Theorem, we want to know what is the probability that this person is innocent, given that the jury decided to convict.

You do some research and find out that for all trials of this degree, 70% of defendants are actually guilty of the crime. Within this 70%, about 90% of defendants are found guilty (i.e., a success) and 10% are found innocent (i.e., the guilty person walks free). For those defendants that actually are innocent, they are rightfully acquitted 85% of the time. Thus, 15% of innocent defendants are wrongfully convicted.make A DECISION TREE!!!

a.If P (A|B) is the probability that the defendant is innocent, given that the jury chose to convict, please describe in words:

i.P (A):

ii.P (B|A):

iii.P (B):

b.Next, find the appropriate numeric values for these variables:

i.P (A):

ii.P (B|A):

iii.P (B):

c.Lastly, plug these values into Bayes' formula and solve for P(A|B).

P (A|B) = [P (A) * P (B|A)] / P (B)

Prompt: Two gas stations/convenience stores operate on opposite sides of a road right off of a main highway. These stores must compete with each other for business by attracting more customer traffic than the other. Because businesses incur fees for using credit cards in their transactions, these increases in cost often get passed onto the customer. Thus, both businesses must charge an additional 3% for items purchased with credit cards. However, although Gas Station A decides to advertise this fee as a "convenience fee for using a credit card", Gas Station B decides to automatically increase all price tags by 3% and advertise a "discount for using cash". After several weeks of sales, it becomes clear that customers are more likely to purchase goods at Gas Station B. Not only that, but the majority of customers at gas Station B are stilling using credit cards to purchase their goods.

a.Interpret this finding using what you know about Prospect Theory.

b.Interpret this finding using what you know about Nudge theory and the importance of defaults.

Choose 1 of the following Behavioral Economics concepts and provide an example of a time you have personally experienced it.

Options:

Endowment Effect, Money Illusion, Effort Heuristic, Myopic Loss Aversion, Diversification Heuristic

a.Which concept did you choose?

b.How have you experienced this effect?

c.What were the consequences?

d.Are you likely to adjust your behavior after learning about these principles? Why/why not?