When Working for the Brooklyn District Attorney, Investigator Robert Burton

question 78

Essay

When working for the Brooklyn District Attorney, investigator Robert Burton analyzed the leading digits of the
amounts from 784 checks issued by seven suspect companies. The frequencies were found to be
0, 9, 0, 70, 485, 189, 8, 23, and 0, and those digits correspond to the leading digits of 1, 2, 3, 4, 5, 6, 7, 8, and 9,
respectively. If the observed frequencies are substantially different from the frequencies expected with Benford's
Law, the check amounts appear to result from fraud. Use a 0.05 significance level to test for goodness-of-fit
with Benford's Law. Does it appear that the checks are the result of fraud?

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Definitions:

Analogy Heuristic

A rule of thumb that applies a solution that solved a problem in the past to a current problem that shares many features with the past problem.

Algorithm

A systematic, step-by-step procedure, such as a mathematical formula, that guarantees a solution to a problem of a certain type if applied appropriately and executed properly.

Working Backwards

is a problem-solving strategy that involves starting with the goal and sequentially planning the steps in reverse to reach the starting point.

Heuristics

Mental shortcuts or rules of thumb that simplify decision making, but can sometimes lead to cognitive biases.