Equation 7: The conditional probability that e equals one, given that y equals one, is the probability that e equals one and y equals one over the probability that y equals one. This is equal to the integral over nu from minus Z times alpha to infinity of the standard normal probability density (lowercase phi) of nu times the standard normal probability distribution function (uppercase phi) of X beta plus gamma minus rho times nu all over the square root of one minus rho squared. The integral then is divided by the standard normal probability distribution function evaluated at Z times alpha.

Back to Equation 8.7

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