Question

In any given year, a male automobile policyholder will make a claim with probability pm and a female policyholder will make a claim with probability pf, where pf ≠ pm. The fraction of the policyholders that are male is α, 0 < α < 1. A policyholder is randomly chosen. If Ai denotes the event that this policyholder will make a claim in year i, show that
P(A2|A1) > P(A1)
Give an intuitive explanation of why the preceding inequality is true.


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  • CreatedOctober 22, 2015
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