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Solution: Perform a Bayesian analysis

Solution: Perform a Bayesian analysis - Microsoft Excel Tutorial

From the course: Learning Excel: Data Analysis

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Solution: Perform a Bayesian analysis

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In the previous movie, I described a problem where you will determine the probability an item is genuine when it's reported genuine and an item is counterfeit when reported counterfeit by museum appraisers and curators based on the base rate of genuine items comprising 70% of the collection and an appraiser accuracy rate of 90%. So let's go ahead and fill in the worksheet and perform our calculations. I'll click and sell B6. The probability an item is genuine is given in B3. So in B6, I'll type equal and B3. That means that the probability it is counterfeit or fake, not real, is 1 minus 70%. So in B7, I'll type equal, 1 minus and our base rate's in B3. So enter. 70 of 30 is 100, which is correct. Now we need to determine the probability the appraisers are correct or incorrect. So in B9, I'll type equal. The probability they're correct is their accuracy, so that's in B4. And as with the probability of an item being counterfeit, the probability of them being incorrect is one minus the…

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