Here is a very very interesting question involving probability that a student saw in her tutorial and asked me. Here it is 🙂
A student is concerned about her car and does not like dents. When she drives to school, she has a choice of parking it on the street in one space, parking it on the street and taking up two spaces, or parking in the lot.
If she parks on the street in one space, her car gets dented with probability 0.1.
If she parks on the street and takes two spaces, the probability of a dent is 0.02 and the probability of a $15 ticket is 0.3.
Parking in a lot costs $5, but the car will not get dented.
If her car gets dented, she can have it repaired, in which case it is out of commission for 1 day and costs her $50 in fees and cab fares. She can also drive her car dented, but she feels that the resulting loss of value and pride is equivalent to a cost of $9 per school day.
She wishes to determine the optimal policy for where to park and whether to repair the car when dented in order to minimize her (long-run) expected average cost per school day. What should the student to maximise her utility (minimise her cost)?
This is an interesting question, I guess its good to know some JCs are trying to introduce decision making process in teaching probability.
I’ll post a solution here soon. But to start off, we observe that we have two states here and student has 4 decisions. Have fun! 🙂