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(a)A gambler has a fair coin and a two-headed coin in his pocket. He selects one of the coins at random; when he flips it, it shows heads. What is the probability that it is the fair coin? (b) Suppose that he flips the same coin a second time and, again, it shows heads. Now what is the probability that it is the fair coin?

answer to (a) is 1/3 which you need for (b), the answer to (b) is

answer

I learned the basics of Bayes, but I don't understand what it means to have $O_1$ and $O_2$

Problem (c)) Suppose that he fluids the same coin a third time and it shows tails. What's the probability that it is the fair coin? How do we solve this?

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For part (c), the answer very obviously should be $1$ since $HHT$ cannot be observed with the two-headed coin. But you can proceed systematically using $P(HHT|F) = 1/8$, $P(HHT|F^c) = 0$ and plug and chug in $$P(F|HHT)=\frac{P(HHT|F)P(F)}{P(HHT|F)P(F)+P(HHT|F^c)P(F^c)}.$$ –  Dilip Sarwate Sep 18 '12 at 21:47
    
@DilipSarwate what page can i find a usage instruction for the notations you're using? –  user133466 Sep 19 '12 at 20:05
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2 Answers

It appears that $O_1$ and $O_2$ are first outcome is heads and second outcome is heads. $P(F|O_1)$ is the probability that the coin is fair given that it comes up heads the first time is $1/3$, and the probability that it comes up heads the second time given that it is the fair coin and came up heads the first time is $1/2$. You can check that the numbers in the denominator are also consistent with this interpretation of $O_1$ and $O_2$.

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so does the comma between $O_1$ and $O_1$ mean intersect? –  user133466 Sep 19 '12 at 2:05
    
@user133466: Yes, if you’re thinking of events as sets in a probability space. In ordinary, everyday terms it’s simply and. –  Brian M. Scott Sep 19 '12 at 2:20
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We can simplify the problem to: given we got two heads in a row, what is the probability it is the fair coin?

So let $R$ be the event "two heads in a row" and $F$ the event "fair coin." We want $\Pr(F|R)$. We have $$\Pr(F|R)=\frac{\Pr(F\cap R)}{\Pr(R)}.$$

The analysis is now standard. (i) The probability we chose the fair coin is $\dfrac{1}{2}$. Given we chose the fair coin, the probability of two heads in a row is $\dfrac{1}{4}$. So $\Pr(F\cap R)=\dfrac{1}{2}\cdot\dfrac{1}{4}=\dfrac{1}{8}$.

(ii) The probability that we chose the two-headed coin is $\dfrac{1}{2}$. Given that it is two-headed, the probability of $R$ is $1$.

Thus $\Pr(R)=\dfrac{1}{2}\cdot\dfrac{1}{4}+\dfrac{1}{2}\cdot 1=\dfrac{5}{8}$.

Now divide. The required conditional probability $\Pr(F|R)$ simplifies to $\dfrac{1}{5}$.

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+1 I think the method given in the OP's book or notes is a very poor approach to the problem, and the notation used just adds to the confusion. I was writing up my solution (essentially the same as yours except I used HH instead of R) when yours was uploaded. Incidentally, this is my favorite example for showing that conditionally independent events are not necessarily independent events. "Heads on first toss" and "Heads on second toss" are conditionally independent events given which coin is drawn but are not unconditionally independent. –  Dilip Sarwate Sep 18 '12 at 20:44
    
@DilipSarwate: You are right, $HH$ is a better choice than $R$. And subscripts almost guarantee confusion. –  André Nicolas Sep 18 '12 at 20:53
    
Using this approach we can get away with using 2 events, but I think the reason they used three events is so we can practice with 3 events. theres actually a third part to the problem I will add to the question when I get home. I think we might not be able to get away with 2 events... –  user133466 Sep 18 '12 at 20:54
    
Can you show an approach using hh? Thank you!!! –  user133466 Sep 18 '12 at 20:57
    
@user133466: You misunderstood the comment. I meant that the symbol $HH$ is a better one than $R$, because you can't forget what it stands for. So everywhere I wrote $R$, write $HH$. Nothing changes. –  André Nicolas Sep 18 '12 at 21:06
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