PROBABILITY : INTRODUCTION

Objective:
 Appreciate the relevance of probability theory in
decision-making.
 Understand the different approaches to probability
 Calculate probabilities in different situation
 Revise probability estimate, if added information is
available.

Introduction:

Basic Terminology in Probability:

1. An event:
An event is one or more of the possible outcomes
of doing something.

2. An experiment:
The activity that produces such an event is an
experiment.

3. Sample Space:
The set of all possible outcomes of an experiment
is called the same space for the experiment.

4. Mutually exclusive Events

Events are said to be mutually exclusive if one and
only one of them can take place at time.

5. A collectively exhaustive List

When a list of the possible events that can result from
an experiment includes every possible outcome, the list
is said to be collectively exhaustive list.

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Probability is:

 A quantitative measure of uncertainty

 A measure of the strength of belief in the
occurrence of an uncertain event
 A measure of the degree of chance or likelihood
of occurrence of an uncertain event
 Measured by a number between 0 and 1 (or
between 0% and 100%)

Types of probability
Classical Relative Frequency Subjective
Approach Approach Approach

1. Objective or Classical Probability:

based on equally likely events
based on long-run relative frequency of events
not based on personal beliefs
 is the same for all observers (objective)
examples: toss a coin, throw a die, pick a card

2. Relative Frequency of Occurrence

The observed relative frequency of an event in a
very large number of trials, or The proportion of
times that an event occurs in the long run when
conditions are stable.

3. Subjective Probability
based on personal beliefs, experiences,
prejudices, intuition - personal judgment
different for all observers (subjective)
examples: Super Bowl, elections, new product
introduction, and snowfall
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Prob-4-14 Pg 169.

Let P(50-74%) = P,
Then P(75-99%) = 1/2*P = 0.50P
P(25-49%) = 2/5*P = 0.40P
P(00-24%) = 0.00
P(100%) = 1/20 = 0.05

Thus 0+0.40P+P+0.50P+0.05P+0.05 = 1
1.9P = 0.95
P = 0.50

Probability Rules:
P(A): The probability of event A happening
P(A or B): The probability of either A or B happening.

P(A or B) = P(A) + P(B) ------------ Mutually Exclusive

= P(A) + P(B) – P(AB) ----- Not Mutually
Exclusive

P(A) + P(not A) = 1

Prob-4-22 Pg 176.
D= Disk drive failure K= key board failure
a) P(D or K) = P(D) + P(K) –P(DK)
0.20 = P(D) + 3P(D) –0.05
0.15 = 4P(D)
P(D) = 0.0625
b)P(K) = 2P(D) = 0.125
Thus P(D or K) = P(D) +P(K) – 0.05
= 0.0625 + 0.1250-0.05
= 0.1825
This means that the computer is 86.25% resistant to
dist-drive and /or key board failure.

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 Probabilities under conditions of
STATISTICAL INDEPENDENCE

1. Marginal Probabilities under statistical

Independence.

2. Joint Probabilities under statistical

Independence:
The probability of two or more independent
events occurring together or in succession is the
product of their marginal probabilities.

P(AB) = P(A) * P(B)

P(AB) : probability of events A & B occurring

together or in succession;  Joint Probabilities

P(A) : Marginal probability of event A happening.

P(B) : Marginal probability of event B happening.

3. Conditional Probabilities under statistical

Independence.

P(B/A) : The probability of event B given that

event A has occurred.

P(B/A) = P(B)

Type of Probability Symbol Formula

Marginal P(A) P(A)
Joint P(AB) P(A) * P(B)
Conditional P(B/A) P(B)

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Prob: 4.31 Pg 184

a) 6/30 b) 12/30 c) 6/30

Prob: 4.32 Pg 184

P(A) + P(not A) = 1

P(1) = 0.75 P(not 1) = 0.25

P(2) = 0.82 P(not 2) = 0.18
P(3) = 0.87 P(not 3) = 0.13
P(4) = 0.90 P(not 4) = 0.10

a) P(1,2,3,4) = 0.75*0.82*0.87*0.90 =
0.481545

b) P(1, not2, not3, 4) = 0.75*0.18*0.13*0.90 =

0.015798

c) P(one noticed) = P(1, not2, not3, not4)

+ P(not 1, 2, not3, not4)
+ P(not 1, not2, 3, not4)
+ P(not 1, not2, not3, 4)
= 0.75*0.18*0.13*0.10 +
0.25*0.82*0.13*0.10
+ 0.28*0.18*0.87*0.10 +
0.25*0.18*0.87*0.90

= 0.01360

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 Probabilities under conditions of
STATISTICAL DEPENDENCE

1. Conditional Probabilities under statistical

dependence.

P(BA
P(B|A) = )
P(A)

2. Joint Probabilities statistical dependence.

P(BA) = P(B|A) x P(A)*

P(BA) : Probability of events B & A happening

together or
in successions.
P(B|A): Probability of event B given that event A
has
happened.
P(A) : Probability that event A will happen.

3. Marginal Probabilities statistical dependence.

Marginal probabilities under statistical

dependence are computed by summing up the
probabilities of the joint events in which the
simple event occurs.

P(A) = P(A,B) + P(A, notB)

Note:
Conditional Probability: given that….

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 Joint probability: both …… and

Type of Statistical
Probabilit Symbol Independen Statistical Dependent
y t
Sum of the probabilities of
Marginal P(A) P(A) the joint events in which A
occurs.
P(AB) or P(A)*P(B) P(A|B)*P(B)
Joint
P(BA) P(B)*P(A) P(B|A)*P(A)
P(B) P(BA)/P(A)
Conditional P(B/A)
P(A) P(AB)/P(B)

Prob: 4.38 Pg 191

H = hurricane in eastern Gulf, F = hurrican hits

Florida.

a) P(H and F) = P(F|H)*P(H)

= 0.76 * 0.85 = 0.646

b)P(F|H) = (¾)*0.76 = 0.57

P(H and F) = P(F|H)*P(H)
= 0.57*0.85 =0.4845

Prob: 4.39 Pg 191

R=WTR completes research on time I = Investigation

occurs.
C= Litre awarded contract

a) P(R) = 0.80, Let P(I) = a.

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 P(C) = P(C|R, not I)*P(R, not I) + P(C| not R,I)*P(not
R,I)
P(C|R,I)*P(R,I) + P(C|not R,not I)*P(not R,not
I)
= 0.67*0.80(1-a) + 0.72*0.20*a + 0.58*0.80*a
+
0.85*0.20*(1-a)
= 0.706 – 0.098a
P(C) ≥ 0.65  0.706 – 0.098*a ≥ 0.65
0.571 ≥ a.
b) P(I) = 0.70 Let P(R) = b

As in part (a) :
P(C) = 0.67*b*0.30 +0.72*(1-b)*0.70 + 0.58*b*0.70
+
0.85(1-b)*0.30
= 0.759 – 0.152b

P(C) ≥ 0.65  0.759 – 0.152*b ≥ 0.65

0.717 ≥ b.

c) P(I) = 0.75 P(R) = 0.85

P(C) = 0.67*0.85*0.25 + 0.72*0.15*0.75 +
0.58*0.85*0.75
+ 0.85*0.15*0.25
= 0.625

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Revising Prior estimates of Probabilities:
Bayes’ Theorem

Bayes’ theorem offers a powerful statistical method of

evaluating new information and revising our prior
estimates of the probability that things are in one state
or another.

e.g.
In a bolt factory machines A, B and C manufacture
respectively 25%, 35% and 40 % of the total output. Of
the total of their output 5, 4 and 2 percent are
defective bolts, A bolt is drawn at random and is found
to be defective. What the probability that it was
manufactured by machines A, B, or C?

Ans.
Let event Ai (i=1,2,3) be the event of drawing a bolt
produced by machine A, B and C, respectively.

Prior Condition
Joint
Probabilit al Posterior
Event Probabilit
y Probabilit Probability
y (2) * (3)
P(Ai) y P(B/Ai)
0.0125/0.03
A1 0.25 0.05 0.0125 45
= 0.362
0.0140/0.03
A2 0.35 0.04 0.0140 45
=0.406
0.0080/0.03
A3 0.40 0.02 0.0080 45
=0.232
Total 1.000 0.0345 1.000

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The above table shows the probability that the
item was defective and produced by machine A
is 0.362, by machine B is 0.406 and machine C is
0.232.

Prob 4.46 pg: 198.

Prior Conditional Joint

Posterior
Probabilit Probability Probabilit
Event Probabilit
y P(Storm/Eve y (2) *
y
P(Event) nt) (3)
0.06/0.61
Dry 0.20 0.30 0.06 =
0.0984
0.27/0.61
Moist 0.45 0.60 0.27
=0.4426
0.28/0.61
Wet 0.35 0.80 0.28
=0.4590
Total 1.000 0.61 1.000

The probability of thunderstorm is 0.61. The

probability of moist conditions, given that the
picnic was cancelled (i.e. given that there was a
thunderstorm) is 0.4426

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