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Lojack costs $1000 to install. 95% of stolen cars with Lojack are recovered, while 60% of cars without Lojack are recovered. Suppose your car is
Lojack costs $1000 to install. 95% of stolen cars with Lojack are recovered, while 60% of cars without Lojack are recovered. Suppose your car is worth $20,000. Cars are stolen from your neighborhood with probability p. Suppose there are 1000 drivers in the city. The expected payoff of installing Lojack for each of the L drivers who install it, h, is _____ whereas the expected payoff of not installing Lojack for each of the (1000 - h) drivers who do not install Lojack, j, is _____. Hint: there is no need to use the solutions in question 16.2; just use p = (1000 - L) / 1000
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