Week 2 Flashcards
Probability
A number telling you the chance of an event occuring.
Event
One or more outcomes, what you are finding the probability of.
Experiment
Measuring or observing an activity to collect data
Subjective Probability
Use when you can’t use classical or empirical probability. We then have to rely on or prior knowledge, experience, and judgement.
Examples:
- Possible Presidential Election Outcomes - Future Market Patterns
Complement
Everything that is not part of Event A.
1 - [Event A] = complement
Law of Large Numbers
When an empirical experiment is conducted with extremely high numbers, then the result will match the hypothetical classical probability.
Sample Space
All possible outcomes. (A Truth Chart)
Simple Event
When an event cannot be more simplified. (Like rolling a 5 with one die.)
Addition Rule
Calculates the probability of a union.
Bayes’ Theorem
If we know that possibility that Event A will happen when Event B does, then we can calculate the probability of Event B occurring when Event A does.
Conditional Probability (of A given B)
Probability that Event A will occur is Event B has or will occur.
Dependent Events
Events that must occur in conjunction with another event.
Independent Events
Occur without the impact of other events.
Intersection
Number of times two (or more) separate events occur at the same time.
Union
The number of times Event A occurs, Event B occurs, or Events A & B occur together.
Simple Probabilty
Looking at a single event
Empirical Probability
Use when you must conduct an experiment to observe the frequency of an event.
Examples:
- The average spending level of a store's customers - Epidemiological research - The efficacy of a certain education model
Classical Probability
Use when we can determine all possible outcomes.
Examples:
- Rolling dice - Choosing cards from a deck
Marginal Probability
= simple probability. (looking at a single event)
Posterior Probability
Probability of an event occurring, no matter what.
Joint Probability
Probability of an intersection.
Combinations
Number of ways a group of objects can be arranged without regard to order. So KQJ=QKJ=JQK=etc.
Permutations
Number of ways that a group of objects can be arranged where order matters. So KQJ≢QKJ≢JKQ≢etc.
Multiplication Rule
Finds the probability of an intersection. (Finds the joint probability)
The Rules of Probability
There are 5
(1) If P(A)=1, then it must occur.
(2) If P(A)=0, then it can never occur.
(3) Probability must fall between 0-1.
(4) All possible probabilities must add up to 1.
(5) The compliment to A must include all of the outcomes that are not A.
Fundamental Counting Principle
The number of ways an event can occur.
Mutually Exclusive Events
Events that can never occur at the same time.
Contingency Table
Number of event occurrences in a table with two or more categories.
Decision Trees
Displays joint and marginal probability taken from a contingency table.
Collectively Exhaustive
When the sample space (Truth Chart) contains all possible outcomes. Corresponds with “classical probability.”
