Question 5. An international competitor to Netflix has a different business mode

Question

Question 5. An international competitor to Netflix has a different business model, where they charge for access to individual channels. Here is a table of probabilities of subscribing to one channel, given a subscription to another (left column is first channel subscribed, top row is the second channel): drama action foreign comedy drama action foreign comedy 1 0.353 0.0380.012 0.7 1 0.067 1 0.01 1 0.024 0.5 0.023 0.001 0.316 0.04 Based on this information, if you have a customer subscribing to action, which channel would you recommend to them? What concerns may you have regarding your recommendation? What additional information, if any, would you request?

Explanation / Answer

If a customer subscribed to action then a comedy channel would be recommended to him or her because the conditional probability is that the second channel is comedy given that the first channel is the action has the highest value.

The additional information that should be requested is the number of subscribers for each channel.

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