There are two taxicab companies in a particular city, “Yellow Cabs” and “White Cabs.” Of all the cabs in the city, 85% are “Yellow Cabs” and 15% are “White Cabs.” The issue of cab color has become relevant in a hit-and-run case before the courts in this city, in which witness testimony will be essential in determining the guilt or innocence of the cab driver in question. In order to test witness reliability, the courts have set up a test situation similar to the one occurring on the night of the hit-and-run accident. Results showed that 80% of the participants in the test case correctly identified the cab color, whereas 20% of the participants identified the wrong company. What is the probability that the accused hit-and-run cabbie is a “White Cabs” employee? (This problem is taken from the book of Kahneman et al.; see the footnote in Chapter 1.)
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