Greg Mankiw’s Blog looks to online betting for the odds that McCain, Clinton, Giuliani, and Edwards will will the 2008 Presidential Election in his POTUS 2008 post. McCain has the edge, but Hilary Clinton is a close second. Using Bayes rule, however, Mankiw shows that if Edwards were to be the Democratic nominee, he would have a better chance of winning the presidency than Clinton.
Bayes Rule
- P(A|B)=P(B|A)*P(A)/P(B) … or equivalently
- P(A|B)=P(B|A)*P(A)/[SUM_i P(B|A_i)*P(A_i)]
- Bayes Rule example