Chapter

Probability
Random Experiments Probability Rules of Probability Independent Events Contingency Tables Counting Rules

McGraw-Hill/Irwin

Copyright 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

Random Experiments
Sample Space
A random experiment is an observational process whose results cannot be known in advance. The set of all outcomes (S) is the sample space for the experiment. A sample space with a countable number of outcomes is discrete.

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Random Experiments
Events
An event is any subset of outcomes in the sample space. A simple event or elementary event, is a single outcome. A discrete sample space S consists of all the simple events (Ei): S = {E1, E2, , En}
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Probability
Definitions
The probability of an event is a number that measures the relative likelihood that the event will occur. The probability of event A [denoted P(A)], must lie within the interval from 0 to 1:
0 < P(A) < 1

If P(A) = 0, then the event cannot occur.

If P(A) = 1, then the event is certain to occur.

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Probability
What is Probability?
Three approaches to probability:
Approach Empirical Example There is a 2 percent chance of twins in a randomlychosen birth. There is a 50 % probability of heads on a coin flip. There is a 75 % chance that England will adopt the Euro currency by 2010.

Classical

Subjective

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Rules of Probability
Complement of an Event
The complement of an event A is denoted by A and consists of everything in the sample space S except event A.

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Rules of Probability
Union of Two Events
(Figure 5.5)

The union of two events consists of all outcomes in the sample space S that are contained either in event A or in event B or both (denoted A B or A or B).
may be read as or since one or the other or both events may occur.
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Rules of Probability
Intersection of Two Events
The intersection of two events A and B (denoted A B or A and B) is the event consisting of all outcomes in the sample space S that are contained in both event A and event B.
may be read as
and since both events occur. This is a joint probability.
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Rules of Probability
General Law of Addition
The general law of addition states that the probability of the union of two events A and B is: P(A B) = P(A) + P(B) P(A B)
When you add the P(A) and P(B) together, you count the P(A and B) twice.
A and B

So, you have to subtract P(A B) to avoid over-stating the probability.

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Rules of Probability
Mutually Exclusive Events
Events A and B are mutually exclusive (or disjoint) if their intersection is the null set () that contains no elements.

If A B = , then P(A B) = 0

Special Law of Addition

In the case of mutually exclusive events, the addition law reduces to:

P(A B) = P(A) + P(B)

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Rules of Probability
Conditional Probability
The probability of event A given that event B has occurred.

Denoted P(A | B). The vertical line | is read as given.

P( A B) P( A | B) P( B)
for P(B) > 0 and undefined otherwise

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Rules of Probability
Odds of an Event
The odds in favor of event A occurring is
P( A) P( A) Odds = P( A ') 1 P( A)

The odds against event A occurring is

P( A) 1 P( A) Odds P( A) P( A)
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Independent and Dependent Events

Event A is independent of event B if the conditional probability P(A | B) is the same as the marginal probability P(A).

When P(A) P(A | B), then events A and B are dependent. Multiplication Law for Independent Events

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Contingency Table
What is a Contingency Table?
A contingency table is a cross-tabulation of frequencies into rows and columns. Example below. From the table, one can compute marginal probabilities, conditional probabilities, and check for independence between the two variables.

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Counting Rules
Fundamental Rule of Counting
If event A can occur in n1 ways and event B can occur in n2 ways, then events A and B can occur in n1 x n2 ways. In general, m events can occur n1 x n2 x x nm ways.

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Counting Rules
Permutations
A permutation is an arrangement in a particular order of randomly sampled items from a group (i.e. XYZ is different from ZYX).

Combinations
A combination is an arrangement of items chosen at random where the order of the selected items is not important (i.e., XYZ is the same as ZYX).
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