Problem 1: XYZ insurance company charges its customers according to their accident

history. If you have not had accidents the last two years will be charged for the new policy $
1,730,000 (state 0); if you have had an accident in each of the last two years you will be
charged $ 2,280,000 (State 1); If you had accidents the first of the last two years you will be
charged $ 1,650,000 (state 2) and if you had an accident the second of the last two years will
be charged $ 1,670,000 (State 3). The historical behavior of each state is given by the
following cases of accident, taken in four different events.

STATE E0 E1 E2 E3 TOTAL
E0 1585 1687 2156 1970 7398
E1 2100 2350 2670 1230 8350
E2 1750 1250 850 560 4410
E3 1270 1380 56 865 3571

a. What is the transition matrix resulting from proportionality according to the accident
history?
𝑆0 = $1.730.00 𝑠𝑖 𝑛𝑜 ℎ𝑎 𝑡𝑒𝑛𝑑𝑖𝑜 𝑎𝑐𝑐𝑖𝑑𝑒𝑛𝑡𝑒𝑠 𝑒𝑛 𝑙𝑜𝑠 𝑢𝑙𝑡𝑖𝑚𝑜𝑠 𝑑𝑜𝑠 𝑎ñ𝑜𝑠, 𝑛𝑢𝑒𝑣𝑎 𝑝𝑜𝑙𝑖𝑧𝑎
𝑆1 = $2.280.000 𝑠𝑖 ℎ𝑎 𝑡𝑒𝑛𝑖𝑑𝑜 𝑢𝑛 𝑎𝑐𝑐𝑖𝑑𝑒𝑛𝑡𝑒 𝑒𝑛 𝑐𝑎𝑑𝑎 𝑢𝑛𝑜 𝑑𝑒 𝑙𝑜𝑠 𝑢𝑙𝑡𝑖𝑚𝑜𝑠 𝑑𝑜𝑠 𝑎ñ𝑜𝑠
𝑆2 = $1.650.000 𝑆𝑖 𝑡𝑢𝑣𝑜 𝑎𝑐𝑐𝑖𝑑𝑒𝑛𝑡𝑒𝑠 𝑒𝑙 𝑝𝑟𝑖𝑚𝑒𝑟𝑜 𝑑𝑒 𝑙𝑜𝑠 ú𝑙𝑡𝑖𝑚𝑜𝑠 𝑑𝑜𝑠 𝑎ñ𝑜𝑠
𝑆3 = $1.670.000 𝑠𝑖 𝑡𝑢𝑣𝑜 𝑢𝑛 𝑎𝑐𝑐𝑖𝑑𝑒𝑛𝑡𝑒 𝑒𝑛 𝑒𝑙 𝑠𝑒𝑔𝑢𝑛𝑑𝑜 𝑑𝑒 𝑙𝑜𝑠 𝑢𝑙𝑡𝑖𝑚𝑜𝑠 𝑑𝑜𝑠 𝑎ñ𝑜𝑠

STATE E0 E1 E2 E3 TOTAL
E0 0,2 0,2 0,3 0,3 1
E1 0,3 0,3 0,3 0,1 1
E2 0,4 0,3 0,2 0,1 1
E3 0,4 0,4 0 0,2 1

b. What is the average premium paid by a customer in Payoff, according to historical

accident rate?
𝐸 = [𝑆0 , 𝑆1 , 𝑆2 , 𝑆3 ]
0,2 0,2 0,3 0,3
0,3 0,3 0,3 0,1
[ ]
0,4 0,3 0,2 0,1
0,4 0,4 0 0,2
0,2 0,2 0,3 0,3
0,3 0,3 0,3 0,1
[𝑆 1 , 𝑆 1 , 𝑆 2 , 𝑆 3 ] [ ]
0,4 0,3 0,2 0,1
0,4 0,4 0 0,2
 0,2 𝑆1 + 0,3 𝑆2 + 0,4 𝑆3 + 0,4 𝑆4 = 𝑆1
0,2 𝑆1 + 0,3 𝑆2 + 0,3 𝑆3 + 0,4 𝑆4 = 𝑆2
0,3 𝑆1 + 0,3 𝑆2 + 0,2 𝑆3 + 0 𝑆4 = 𝑆3
0,3 𝑆1 + 0,1 𝑆2 + 0,1 𝑆3 + 0,2 𝑆4 = 𝑆4
𝑆1 + 𝑆2 + 𝑆3 + 𝑆4 = 1

𝑆1 + 𝑆2 + 𝑆3 + 𝑆4 = 1

−0,8 𝑆1 + 0,3 𝑆2 + 0,4 𝑆3 + 0,4 𝑆4 = 0

0,2 𝑆1 − 0,7 𝑆2 + 0,3 𝑆3 + 0,4 𝑆4 = 0
0,3 𝑆1 + 0,3 𝑆2 − 0,8 𝑆3 + 0 𝑆4 = 0
1 1 1 1 1
−0,8 0,3 0,4 0,4 0
( | )
0,2 −0,7 0,3 0,4 0
0,3 0,3 −0,8 0 0
Aplicando el método de gauss Jordan obtenemos las siguientes probabilidades:

𝑆1 = 0,31
𝑆2 = 0,29
𝑆3 = 0,22
𝑆4 = 0,18

STATE Promedio pagado por cliente

E0 31%
E1 29%
E2 22%
E3 18%
Problem 2
In Colombia there are 5 main mobile operators such as Tigo, Comcel, Movistar, ETB and
Uff, which we will call states. The following chart summarizes the odds that each client
has to stay in their current operator or make a change of company.

Matriz de transicion
TIGO COMCEL MOVISTAR ETB UFF SUMA
TIGO 0,18 0,28 0,19 0,18 0,17 1
COMCEL 0,21 0,23 0,17 0,25 0,14 1
MOVISTAR 0,19 0,16 0,23 0,26 0,16 1
ETB 0,18 0,19 0,23 0,21 0,19 1
UFF 0,22 0,23 0,19 0,17 0,19 1

Estado Inicial

TIGO COMCEL MOVISTAR ETB UFF SUMA

P0 0,25 0,2 0,3 0,1 0,15 1

TIGO COMCEL MOVISTAR ETB UFF SUMA

P1 0,195 0,2175 0,202 0,2195 0,166 1

TIGO COMCEL MOVISTAR ETB UFF SUMA

P2 0,1952 0,2168 0,2025 0,2163 0,1692 1

TIGO COMCEL MOVISTAR ETB UFF SUMA

P3 0,1953 0,2169 0,2024 0,2162 0,1692 1

TIGO COMCEL MOVISTAR ETB UFF SUMA

P4 0,1953 0,2169 0,2024 0,2162 0,1692 1

Analisis: En el periodo P4 no hay mas variacion, el estado es estable.

Problem 3
In Colombia there are 6 main mobile operators such as Avantel, Tigo, Comcel, Movistar,
ETB and Uff, which we will call states. The following chart summarizes the odds that each
client has to stay in their current operator or make a change of company.

Matriz de transicion
AVANTEL TIGO COMCEL MOVISTAR ETB UFF SUMA
AVANTEL 0,22 0,15 0,17 0,15 0,19 0,12 1
TIGO 0,17 0,15 0,15 0,17 0,18 0,18 1
COMCEL 0,16 0,19 0,17 0,17 0,16 0,15 1
MOVISTAR 0,18 0,18 0,19 0,18 0,15 0,12 1
ETB 0,15 0,19 0,19 0,12 0,18 0,17 1
UFF 0,14 0,17 0,17 0,19 0,18 0,15 1

Estado Inicial

AVANTEL TIGO COMCEL MOVISTAR ETB UFF SUMA

P0 0,1 0,15 0,15 0,35 0,1 0,15 1

AVANTEL TIGO COMCEL MOVISTAR ETB UFF SUMA

P1 0,1705 0,1735 0,176 0,1695 0,1675 0,143 1

AVANTEL TIGO COMCEL MOVISTAR ETB UFF SUMA

P2 0,1708 0,1717 0,1733 0,1628 0,1731 0,1484 1

AVANTEL TIGO COMCEL MOVISTAR ETB UFF SUMA

P3 0,1705 0,1717 0,1733 0,1625 0,1734 0,1486 1

AVANTEL TIGO COMCEL MOVISTAR ETB UFF SUMA

P4 0,1705 0,1717 0,1733 0,1625 0,1734 0,1486 1

Analisis: En el periodo P4 no hay mas variacion, el estado es estable.

Problem 4
Suppose that 4 types of soft drinks are obtained in the market: Colombian, Pepsi Cola, Fanta
and Coca Cola when a person has bought Colombian there is a probability that they will
continue to consume 40%, 20% of which will buy Pepsi Cola, 10% that Fanta buys and 30%
that Coca Cola consumes; when the buyer currently consumes Pepsi Cola there is a
probability that he will continue to buy 30%, 20% buy Colombiana, 20% that Fanta consumes
and 30% Coca Cola; if Fanta is currently consumed, the likelihood of it continuing to be
consumed is 20%, 40% buy Colombian, 20% consume Pepsi Cola and 20% go to Coca Cola.
If you currently consume Coca Cola the probability that it will continue to consume is 50%,
20% buy Colombian, 20% that consumes Pepsi Cola and 10% that is passed to Fanta.
At present, each Colombian brand, Pepsi Cola, Fanta and Coca Cola have the following
percentages in market share respectively (30%, 25%, 15% and 30%) during week 3.

Matriz de transicion
COLOMBIAN PEPSI COLA FANTA COCA COLA SUMA
COLOMBIAN 0,4 0,2 0,1 0,3 1
PEPSI COLA 0,2 0,3 0,2 0,3 1
FANTA 0,4 0,2 0,2 0,2 1
COCA COLA 0,2 0,2 0,1 0,5 1

Estado Inicial

COLOMBIAN PEPSI COLA FANTA COCA COLA SUMA

P0 0,3 0,25 0,15 0,3 1

P1 COLOMBIAN PEPSI COLA FANTA COCA COLA

0,29 0,225 0,14 0,345 1

P2 COLOMBIAN PEPSI COLA FANTA COCA COLA

0,286 0,2225 0,1365 0,355 1

P3 COLOMBIAN PEPSI COLA FANTA COCA COLA

0,2845 0,22225 0,1359 0,35735 1

P4 COLOMBIAN PEPSI COLA FANTA COCA COLA

0,28408 0,222225 0,135815 0,35788 1
Problem 5
Suppose you get 6 types of Jeans brands in the Colombian market: Brand 1, Brand 2, Brand
3, Brand 4, Brand 5 and Brand 6. The following table shows the odds that you continue to
use the same brand or change it.

Matriz de transicion
BRAND 1 BRAND 2 BRAND 3 BRAND 4 BRAND 5 BRAND 6 SUMA
BRAND 1 0,21 0,19 0,22 0,13 0,14 0,11 1
BRAND 2 0,17 0,18 0,15 0,13 0,19 0,18 1
BRAND 3 0,18 0,14 0,22 0,13 0,22 0,11 1
BRAND 4 0,21 0,16 0,15 0,22 0,17 0,09 1
BRAND 5 0,14 0,16 0,22 0,15 0,15 0,18 1
BRAND 6 0,2 0,13 0,21 0,15 0,17 0,14 1

Estado Inicial

BRAND 1 BRAND 2 BRAND 3 BRAND 4 BRAND 5 BRAND 6 SUMA

P0 0,19 0,18 0,17 0,15 0,19 0,12 1

BRAND 1 BRAND 2 BRAND 3 BRAND 4 BRAND 5 BRAND 6 SUMA

P1 0,1832 0,1623 0,1957 0,1497 0,1726 0,1365 1

BRAND 1 BRAND 2 BRAND 3 BRAND 4 BRAND 5 BRAND 6 SUMA

P2 0,18419 0,160733 0,196795 0,149655 0,174083 0,134544 1

BRAND 1 BRAND 2 BRAND 3 BRAND 4 BRAND 5 BRAND 6 SUMA

P3 0,18413558 0,16076814 0,1969274 0,14964149 0,17404705 0,13448034 1

BRAND 1 BRAND 2 BRAND 3 BRAND 4 BRAND 5 BRAND 6 SUMA

P4 0,18413336 0,16076647 0,19692652 0,14963828 0,17405672 0,13447864 1

BRAND 1 BRAND 2 BRAND 3 BRAND 4 BRAND 5 BRAND 6 SUMA

P5 0,18413279 0,16076644 0,19692688 0,14963815 0,17405652 0,13447922 1