I would really appreciate some help on this one. I'm completely lost. I have no idea why my method doesnt work.
"Your new neighbors have three children. If you are told about three independent observations of a boy, what is the probability that they have three boys?"
I solve it by saying that our sample space is $S = \{bbb,ggg,bgb,bbg,ggb,gbg,gbb,bgg\}$.
If we then introduce the event $A_i = \{$observation i of boy$\}$ and call the event $B=\{bbb\}$
then $P(A_i)=7/8 $ for $i=1,2,3$ and the events $A_i$ are independent according to the problem text. Furthermore, clearly $P(B) = 1/8$.
We now want to calculate the probability
$P(B|A_1 \cap A_2 \cap A_3)$ which is (because of total law of probability/Bayes formula) equal to
$\frac{P(B)P(A_1 \cap A_2 \cap A_3 | B)}{P(A_1 \cap A_2 \cap A_3)}$
Now, $P(A_1 \cap A_2 \cap A_3) = P(A_1)P(A_2)P(A_3)$ because of their independence, and I argue that $P(A_1 \cap A_2 \cap A_3 | B) = 1$ because the probability of observing a boy three times given that there only is three boys should be one hundred percent.
This simplifies to
$\frac{8^2}{7^3}$
which is clearly wrong. The answer should be 1/2, but i have no idea how to come up with that.
What am I doing wrong? Thanks!
Since you are asked to give a probability given observations, you need to chose a prior distribution and then update it using Bayes rule, as you suggested. Let say you decide that each child has a probability 1/2 to be a boy, independently of the other children's sex (you could refine this prior, it is generally a bit more than 1/2). You have four events $\{A_0,A_1,A_2,A_3\}$ where $A_i$ is the event that your neighbor has $i$ boys. Before your observation, your prior distribution of probability is, by counting the number of outcomes, $P(A_0)=P(A_3)=1/8$ and $P(A_1)=P(A_2)=3/8$. Let us call $O$ the event "3 independent observations of a child gave me 3 times a boy". You have $P(O|A_3)=1$, $P(O|A_2)=(2/3)^3$, $P(O|A_1)=(1/3)^3$ and $P(O|A_0)=0$ (you can compute them using Bernouilli distributions).
We conclude with Bayes rule $$ P(A_3|O) = \frac{P(O|A_3)P(A_3)}{\sum_i P(O|A_i)P(A_i)} = \frac{1\cdot 1/8}{1\cdot 1/8 + (2/3)^3\cdot 3/8 + (1/3)^3\cdot 3/8 + 0 \cdot 1/8} = 1/2. $$