Outline

Random Variables

Mean and Variance

Joint Probability Tables

Conditional Probabilities

Probability Trees

Outline

Random Variables

Mean and Variance

Joint Probability Tables

Conditional Probabilities

Probability Trees

Probability

Random Variables Mean and Variance Joint Probability Tables Conditional Probabilities Probability Trees

Betsy Greenberg
5

Betsy Greenberg Statistics and Modeling

McCombs

Betsy Greenberg Statistics and Modeling

McCombs

Outline

Random Variables

Mean and Variance

Joint Probability Tables

Conditional Probabilities

Probability Trees

Outline

Random Variables

Mean and Variance

Joint Probability Tables

Conditional Probabilities

Probability Trees

Random Variables

Example
The maintenance sta of a large oce building regularly replace orescent ceiling lights that have gone out. During a visit to a typical oor they may have to replace several lights. The manager says 20% of the time there are no lights to replace 15% of the time there is one 20% of the time there are 2 30% of the time there are 3 15% of the time there are 4 to replace Never more than that.

Statistics deals with uncertainty Random variables provide the language for dealing with uncertainty A random variable is an uncertain numerical outcome Random variable associates a numerical value with each possible random outcome Probability distribution lists the possible values and the corresponding probability

Betsy Greenberg Statistics and Modeling

McCombs

Betsy Greenberg Statistics and Modeling

McCombs

Outline

Random Variables

Mean and Variance

Joint Probability Tables

Conditional Probabilities

Probability Trees

Outline

Random Variables

Mean and Variance

Joint Probability Tables

Conditional Probabilities

Probability Trees

Random Variable

Mean of a Random Variable

Let the random variable X represent the number of bulbs that need to be replaced

Denoted by X Also called the Expected value, denoted by E [X ] X = x1 P1 + x2 P2 + ... + xn Pn Weighted sum of possible values with probabilities as weights

Betsy Greenberg Statistics and Modeling

McCombs

Betsy Greenberg Statistics and Modeling

McCombs

Outline

Random Variables

Mean and Variance

Joint Probability Tables

Conditional Probabilities

Probability Trees

Outline

Random Variables

Mean and Variance

Joint Probability Tables

Conditional Probabilities

Probability Trees

Mean of a Random Variable

How many lights should the manager expect the sta to replace on a oor?

Variance of a Random Variable

2 Denoted by X 2 X = (x1 X )2 P1 + (x2 X )2 P2 + ... + (xn X )2 Pn

E [X ] = X Does the manager expect the sta to replace this many lights on each oor? The manager expects that the sta will replace an average of this many lights on each oor.
Betsy Greenberg Statistics and Modeling McCombs

the standard deviation X is the square root of the variance Example: Variance of X (Number of lights to replace)
2 X = (0 2.05)2 0.2 + (1 2.05)2 0.15 + (2 2.05)2 0.2 + (3 2.05)2 0.3 + (4 2.05)2 0.2

X =
Betsy Greenberg Statistics and Modeling McCombs

Outline

Random Variables

Mean and Variance

Joint Probability Tables

Conditional Probabilities

Probability Trees

Outline

Random Variables

Mean and Variance

Joint Probability Tables

Conditional Probabilities

Probability Trees

Example: Watching TV Ads

Advertisers spend billions on television advertising. This money gets the ads broadcast, but does anyone watch? An episode of a TV program such as Desperate Housewives might be seen in 25 million households, but do viewers watch the ads? A 30-second spot for a top-rated show goes for as much as $600,000, so sponsors care. Here is some data collected from the Nielsen survey.

From Data to Probabilities

Divide every number on the table by 5,000.

Betsy Greenberg Statistics and Modeling

McCombs

Betsy Greenberg Statistics and Modeling

McCombs

Outline

Random Variables

Mean and Variance

Joint Probability Tables

Conditional Probabilities

Probability Trees

Outline

Random Variables

Mean and Variance

Joint Probability Tables

Conditional Probabilities

Probability Trees

Joint Probability

Marginal Probability

Displayed in interior cells of a contingency table Represent the probability of an intersection of two or more events

Displayed in the margins of a contingency table Represent the probability of one event

Betsy Greenberg Statistics and Modeling

McCombs

Betsy Greenberg Statistics and Modeling

McCombs

Outline

Random Variables

Mean and Variance

Joint Probability Tables

Conditional Probabilities

Probability Trees

Outline

Random Variables

Mean and Variance

Joint Probability Tables

Conditional Probabilities

Probability Trees

Multiplication Rule for Independent Events

Event A = Person watches ads Event B = Person watches Desperate Housewives Are A and B mutually exclusive? Events are mutually exclusive if they have no outcomes in common. Are A and B independent? Two events are independent if the occurrence of one does not aect the chances for the occurrence of the other.
Betsy Greenberg Statistics and Modeling McCombs

Event A = Person watches ads Event B = Person watches Desperate Housewives Two events A and B are independent if the probability that both A and B occur is the product of the probabilities of the two events. P(A and B) = P(A) P(B)
P(A) = P(B) = P(A and B) =

Are A and B independent?

Betsy Greenberg Statistics and Modeling McCombs

Outline

Random Variables

Mean and Variance

Joint Probability Tables

Conditional Probabilities

Probability Trees

Outline

Random Variables

Mean and Variance

Joint Probability Tables

Conditional Probabilities

Probability Trees

Multiplication Rule for Independent Events

Conditional Probabilities

We can also dene random variables: X = Watching ads with outcomes Yes and No Y = TV show with outcomes 60 Minutes, Desperate Housewives, and Football Game X and Y are independent if all of the joint probabilities in the table are equal to the product of the marginal probabilities.

Event A = Person watches ads Event B = Person watches Desperate Housewives Conditional Probability P(A|B) = P(A and B) P(B)

| means given, so P(A|B) is the probability a person watches ads given they watch Desperate Housewives
Betsy Greenberg Statistics and Modeling McCombs

Betsy Greenberg Statistics and Modeling

McCombs

Outline

Random Variables

Mean and Variance

Joint Probability Tables

Conditional Probabilities

Probability Trees

Outline

Random Variables

Mean and Variance

Joint Probability Tables

Conditional Probabilities

Probability Trees

Conditional Probabilities

Conditional Probabilities

Event A = Person watches ads Event B = Person watches Desperate Housewives Conditional Probability P(A|B) = P(A and B) = P(B)

Event A = Person watches ads Event B = Person watches Desperate Housewives Some people nd it easier to think about counts: P(A|B) = Count for A and B Total for B P(A|B) =

Betsy Greenberg Statistics and Modeling

McCombs

Betsy Greenberg Statistics and Modeling

McCombs

Outline

Random Variables

Mean and Variance

Joint Probability Tables

Conditional Probabilities

Probability Trees

Outline

Random Variables

Mean and Variance

Joint Probability Tables

Conditional Probabilities

Probability Trees

Conditional Probabilities

Another Example

Event A = Person watches ads Event B = Person watches Desperate Housewives Conditional Probability P(B|A) = P(A and B) 0.07 = = 0.154 P(A) 0.455

Event A = Person watches ads Event C = Person watches 60 Minutes Conditional Probability P(A|C ) =

P(B|A) is the probability that the person watches Desperate Housewives given they watch ads. P(B|A) is dierent from P(A|B)
Betsy Greenberg Statistics and Modeling McCombs Betsy Greenberg Statistics and Modeling McCombs

Outline

Random Variables

Mean and Variance

Joint Probability Tables

Conditional Probabilities

Probability Trees

Outline

Random Variables

Mean and Variance

Joint Probability Tables

Conditional Probabilities

Probability Trees

General Multiplication Rule

Probability Tree
Graphical depiction of conditional probabilities Helpful for large problems

General Multiplication Rule P(A and B) = P(A)P(B|A) P(A and B) = P(B)P(A|B) If A and B are independent, P(A) = P(A|B) and P(B) = P(B|A) Tree Diagram

Betsy Greenberg Statistics and Modeling

McCombs

Betsy Greenberg Statistics and Modeling

McCombs

Outline

Random Variables

Mean and Variance

Joint Probability Tables

Conditional Probabilities

Probability Trees

Outline

Random Variables

Mean and Variance

Joint Probability Tables

Conditional Probabilities

Probability Trees

Organizing Probabilities
Success of Advertising on TV depends on whether or Not Viewer Sees Ad Tree shows sequences of events as paths that suggest branches

Best Practices:
Think conditionally. Presume events are dependent and use the General Multiplication Rule. Use labels to organize probabilities. Use probability trees for sequences of conditional probabilities. Check that you have included all of the events.

Betsy Greenberg Statistics and Modeling

McCombs

Betsy Greenberg Statistics and Modeling

McCombs

Outline

Random Variables

Mean and Variance

Joint Probability Tables

Conditional Probabilities

Probability Trees

Pitfalls:

Do not confuse P(A|B) for P(B|A). Dont think that mutually exclusive means the same thing as independent. Do not confuse counts with probabilities.

Betsy Greenberg Statistics and Modeling

McCombs