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(solution) The guide claims an arrival rate of 1 fish/hour. If you don't


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The guide claims an arrival rate of 1 fish/hour. If you don?t catch a fish in a short period of time, it is quite plausible that the guide?s claim is correct. If you still don?t catch a fish over a long period of time, it becomes very implausible that you would catch no fish if your guide is correct. This would lead you to question the guide?s claim.

 

How long would you have to fish without catching anything before you fired your guide?

 

You do not wish to fire your guide without cause, but neither do you wish to continue to pay for ineffective assistance. Explain clearly how you arrived at your answer. Indicate both the time you would be willing to wait and the probability of obtaining zero fish at which you would fire the guide.

 


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Sep 13, 2020

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