In the situation of problem 17-6, how would you account for the prior knowledge that 8% of the population of those who receive a brochure actually buy?
Problem 17-6
A mail-order firm wants to be able to classify people as prospective buyers versus nonbuyers based on some of the people's demographics provided on mailing lists. Prior experience indicates that only 8% of those who receive a brochure end up buying from the company. Use two criteria to determine the minimum overall prediction success rate you would expect from a discriminant function in this case.