Section 2.

8 - Bayes' Theorem

Theorem 2.12: If the events B1, B2, ..., and Bk constitute a partition of the sample space S and
k
P(Bi)  0, for i = 1, 2, ..., k, then for any event A in S, P( A)   P( Bi )  P( A | Bi ) . This theorem
i 1
is also called the rule of total probability or the rule of elimination.

Example 2.26 (page 49): The members of a consulting firm rent cars from three rental
agencies: 60 percent from agency 1, 30 percent from agency 2, and 10 percent from
agency 3. If 9 percent of the cars from agency 1 need a tune-up, 20 percent of the cars
from agency 2 need a tune-up, and 6 percent of the cars from agency 3 need a tune-up,
what is the probability that a rental car delivered to the firm will need a tune-up?

Solution: Utilizing Theorem 2.12, we have the corresponding percentages from which the
cars come multiplied by the respective probabilities (percentages) of those cars from the
agencies that need a tune-up. Thus, since 60% of the cars come from agency 1 and 9% of
those cars need tune-ups, we multiply .6 * .09 to get .054. However, since this does not
account for 100% of the cars that are rented, we must go through the same process for the
cars from agency 2 and from agency 3 (i.e. 30% * 20% for agency 2 cars that need a tune-
up, and 10% * 6% for agency 3 cars that need a tune-up). 30% * 20% = 0.06 and 10% * 6%
= 0.006. Adding these altogether, we get 0.054 + 0.06 + 0.006 = 0.12

Therefore, 12% of all cars will need a tune-up.

This can now be expanded to answer the following question: If a rental car delivered to the
consulting firm needs a tune-up (this is a condition), what is the probability that it came from rental
agency 2? We utilize what is referred to as Bayes' Theorem.

Theorem 2.13: If B1, B2, ..., Bk constitute a partition of the sample space S and P(Bi)  0 for i = 1,
2, ..., k, then for any event A in S such that P(A) 
P( Br )  P( A | Br )
0, P( Br | A)  k
, for r  1, 2,..., k .
 P( B )  P( A | B )
i 1
i i

The proof for Bayes' Theorem is found on page 50 of the text. The tree diagram process is
illustrated on pages 50-51.

Examples 2.27 and 2.28 on pages 50 and 51 illustrate the use of Bayes' Theorem.