Jones, the CEO of a company, strongly believes that 2 of his 1,000 employees hav
ID: 3462222 • Letter: J
Question
Jones, the CEO of a company, strongly believes that 2 of his 1,000 employees have been selling company secrets to the competition, but he doesn’t know which ones. So he decides to subject each employee to a lie detector test that is 99% reliable (for both type 1 and type 2 errors). He starts this process, and Lisa, an employee, tests positive for lying when she said it wasn’t her. How probable should Jones think it is that Lisa is selling company secrets? Explain your reasoning and show your work.
Explanation / Answer
Jones can be very much sure that Lisa was selling company secrets. Since the device is established to be 99% accurate, it can be concluded there’s only 1% probability of it failing to detect an individual’s honesty.
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