Beruflich Dokumente
Kultur Dokumente
April 2019
Abhishek Rishabh
ISB
Topics
• Basic Probability Theory
• Descriptive Statistics
• Normal Distribution
• Example –
• Toss a coin. – What happens?
• You can either get heads or tails.
• What about the probability of getting heads or tails?
• How do you know that?
Examples
• Suppose you roll a die. – What happens?
• Basic outcomes: {}, {(I)}, {(C)}, {(V)}, {(I,C)}, {(I,V)}, {(C,V)}, {(I,C,V)}
• A continuous r.v can take any value within some interval of numbers. It is measured and not counted.
• Continuous distributions are nicer to deal with and are good approximations
when there are a large number of possible values
Probability Mass Function (PMF)
• What is it?
• and
• Probability :
Probability Mass Function(PMF)
• Example – Rolling a die. x p(x)
1 p(x=1)=1/6
p(x)
2 p(x=2)=1/6
1/6 3 p(x=3)=1/6
1 2 3 4 5 6 x 4 p(x=4)=1/6
P(x) 1
all x
5 p(x=5)=1/6
6 p(x=6)=1/6
1.0
Cumulative Distribution Function(CDF)
• What is it?
6 Prob(x≤6)=6/6
Example
• The number of patients seen in the ER in any given hour is a
random variable represented by x. The probability distribution
for x is:
x 10 11 12 13 14
Prob(x) .4 .2 .2 .1 .1
• A set can have no elements, in which case it is called the empty set,
denoted by .
• For example, the set of all possible outcomes of a die roll is {1, 2, 3, 4, 5, 6}
Set Theory
• The complement of set is denoted by
• If S={1,2,3,4,5,6,7,8} , A ={4,5,6,7,8} ,
B={1,4,6,7},
=?
Venn Diagrams and Basic Set Operations
Example
•• Toss a coin three times, what is the probability of at least two heads ?
• There are 8 possible outcomes which, if the coin is unbiased, should all be equally likely:-
• Two or more heads result from the 4 outcomes which are ringed.
• The probability of two or more heads is, therefore:
Probability =
Probability and Set Theory
• If A and B are events then
• Probability of A
A B
• Probability of AUB
A B
• For example :
—The probability that I will pay my electricity bill given that I have
just been paid.
• If these two events are A and B then they are not INDEPENDENT
we write P(A|B) ~ P(A given B)
Conditional Probability
If B has already happened then our event must be somewhere in B
A B
BUT, How can A happen if our event must be in the B space ?
And so Our Probability P(A|B) is the ratio of Green Space ÷ Red space
P( A B) A B
P( A | B)
P( B)
Descriptive Statistics
Descriptive Statistics – Meaning
• Descriptive statistics are used to describe the basic features of
the data in a study. They provide simple summaries about the
sample and the measures. Together with simple graphics
analysis, they form the basis of virtually every quantitative
analysis of data.
Descriptive Statistics – Example
• It’s also how we expect X to behave on-average over the long run
• Standard Deviation:
• First compute variance:
)2 = E(X2) – E(X)2
• Early statisticians noticed the same shape coming up over and over again in different
• A lot of things can be represented using normal distribution- such as height of students etc.
• https://galtonboard.com/probabilityexamplesinlife
Normal Distribution (Bell Curve)
• Some properties of normal distributions
• Normal distributions are denser in the center and less dense in the tails.
• Normal distributions are defined by two parameters, the mean (μ) and the standard
deviation (σ).
Probability Calculations for the Normal
“Model”
• The probability associated with any single value of the random variable is Zero. Why?
• Probability of values being in a range = Area under the pdf curve in that range
� ~ �(0, 1)
• P(X ≤ x) = P(Z ≤ z)
Z Table
• What is it?
• http://www.z-table.com/
Z Table
• Find P(Z < 2.13)
• Find P(1<Z<1.67)
Relationship between variables
Relationship - Meaning
• Relationship means how changing one variable affects other
variables.
• Form of relationship
• Strength of relationship
• What is the direction, form and strength of relationship in the sales and
price relationship example?
7 16 13 60
Ad Exp
Covariance
• Covariance can be used to find the direction of relationship
between two variables but not the strength.
Cov ( X ,Y ) S XY
Correl( X ,Y ) rXY
SD( X ).SD(Y ) S X SY
Cov(X,Y) – Covariance between X and Y
NO Correlation!
Linear Combination of Random Variables
• Construct W = aX + bY ; a, b are any constants; X, Y are two random variables
• Mean: E[W] = aE[X] + bE[Y]
• Variance: Var[W] = a2Var[X] + b2Var[Y] + 2abCov[X,Y]