Linear AlgebraHardMarkov Chains & Long-Run Behavior
Markov Chains & Long-Run Behavior · Hard problem
An insurance claim is modelled as an absorbing Markov chain. Each day a Filed claim either moves to Review (probability ) or stays Filed (probability ); a claim under Review is resolved (probability , absorbing) or stays under Review (probability ). Staff time costs for each day a claim is Filed and for each day it is under Review. Starting with a newly Filed claim, what is the expected total staff-time cost until it is resolved? Express your answer as a common fraction.