Question

Assume that the distribution of prices from which the consumer draws is (i) discrete and (ii) Uniformly distributed with N possible stores/prices from which to draw.

(a) If the consumer is lost in the mall and doesn’t remember the last store he visited (i.e. the last price he drew) and so cannot avoid the possibility of returning to the same store, are successive price draws dependent or independent?

(b) If the consumer is lost in the mall and does remember the last store he visited (i.e. the last price he drew) and so can avoid the possibility of returning to the same store, are successive price draws dependent or independent?

Answer 1