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Old 02-03-2019, 04:09 PM
SweepingRocks SweepingRocks is offline
Join Date: Jun 2017
College: Bentley University (Class of 2019ish)
Posts: 235

Originally Posted by Gandalf View Post
Suppose the warranty paid 5 at the first failure if before 2 or after 10. Would you ignore the probability of those when calculating the 90th percentile? Presumably you would not ignore that probability.

So why would you propose ignoring that probability when the warranty pays 0 for those failure times?

You are treating the question as asking the 90th percentile of the payment, given than a nonzero payment was made.
I think I understand now!

Initially I was confused because I thought that if we did account for the times when it pays $0, we would take the integral between 0 and h.

But since we're looking for the 90th percentile of Z, we would start at 2, since the value for that 20% of time between 0 and 2 would be 0, correct?
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