In: Statistics and Probability
- A large company offers its employees 2 different health
insurance plans and 2 different life insurance plans. The table
below shows the proportions of employees who choose these plans.
Since it is known that a randomly selected employee chooses Plan 2
in life insurance, what is the probability of choosing Plan 1 in
health insurance?
Life insurance
Health Insurance 1. Plan 2. Plan
1. Plan 20% 15%
2. Plan 25% 40%
The table gives us joint distribution.
Thus, Probability that an employee has Plan 1 in life insurance and plan 1 in health insurance is 0.2
Probability that an employee has Plan 1 in life insurance and plan 2 in health insurance is 0.25
Probability that an employee has Plan 2 in life insurance and plan 1 in health insurance is 0.15
Probability that an employee has Plan 2 in life insurance and plan 2 in health insurance is 0.40
From this joint distribution, we can find the marginal distribution.
Thus, Probability that an employee has Plan 1 in life insurance is 0.45
Probability that an employee has Plan 2 in life insurance is 0.55
Probability that an employee has Plan 1 in health insurance is 0.35
Probability that an employee has Plan 2 in health insurance is 0.65
We want Probability that employee chooses plan 1 in health insurance given he has plan 2 in life insurance.
Thus, Probability that employee chooses plan 1 in health insurance given he has plan 2 in life insurance is 0.27273