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probability
Complement event :
Difference of events :
Definition of probability:
set theory vs. probability
The application of set theory to probability is summarized in the
next table.
Example 2: P(E={two dots, four dots, six dots}) = 1/6 + 1/6 + 1/6
A example:
(1) The classical approach
In order to apply the classical approach to a problem
we have to assume that each outcome is equally likely
to occur, so in this case we would have to assume that
the customer is equally likely to select each component.
The mistake we have made is to ignore the fact that heavy rain
and flooding are not mutually exclusive: they can and have
occurred together.
This has meant that we have double-counted the nine years
when both events did occur, counting them both as heavy rain
years and as flood years.
(2) The addition rule
(cont.)
Thus the correct answer to our problem is:
(3) Complementary events
If A is an event then the event A does not
occur is said to be the complement of A.
The complement of event A can be written as
A (pronounced A bar).
For example:
the complement of the event project completed
on time is the event project not completed on
time;
the complement of the event inflation exceeds
5% next year is the event inflation is less than or
equal to 5% next year.
(3) Complementary events
(cont.)
Since it is certain that either the event or its complement
must occur their probabilities always sum to one. This leads to
the useful expression:
For example:
what is the probability that both the New York and
the London Stock Market indices will fall today?
what is the probability that we will suffer strikes this
month at both of our two production plants?
(6) The multiplication rule
(cont.)
The probability of A and B occurring is known as
a joint probability, and joint probabilities can be
calculated by using the multiplication rule.
Since it seems reasonable to assume that the two completion times are
independent, we have:
p (bridge and dam completed on time) = p (bridge completed on time)
p (dam completed on time)
= 0.8 0.6 = 0.48
(6) The multiplication rule
(cont.)
The use of the multiplication rule is not
limited to two independent events.
For example, if we have four independent
events, A, B, C and D, then:
p (assets nationalized)
= p (either Socialists win and nationalize
or Conservatives win and nationalize)
A: 90~100 3 12 2
B: 80~89 4 13 16
C: 70~79 1 6 10
D: 60~69 8 4 10
Failed: <60 0 3 0
Sum 16 38 38
An example: history data of
score in decision analysis
Year
2011 2012 2013 Sum pdf cdf
Score
Sum 16 38 38 92 1.000 /
Method of relative heights
The method of relative heights is one well-
known graphical technique that is designed to
elicit a probability density function.
First, the decision maker is asked to identify the
most likely value of the variable under
consideration and a vertical line is drawn on a
graph to represent this likelihood.
Shorter lines are then drawn for other possible
values to show how their likelihoods compare with
that of the most likely value.
Relative heights
Example: let us suppose that a fire department has been asked
to specify a probability distribution for the number of emergency
calls it will receive on a public holiday.
The chief administrator of the department considers that two is the
most likely number of calls. To show this, the analyst draws on a
graph a line which is 10 units long.
Further questioning reveals that the administrator thinks that three
requests are about 80% as likely as two, so this is represented by a
line eight units long.
The other lines are derived in a similar way, so that the likelihood
of seven requests, for example, is considered to be only 10% as
likely as two and it is thought to be extremely unlikely that more
than seven requests will be received.
To convert the line lengths to probabilities they need to be
normalized so that they sum to one. This can be achieved by
dividing the length of each line by the sum of the line lengths,
which is 36, as shown below (note that the probabilities do not
sum to exactly one because of rounding).
Relative heights
(3) Consistency and coherence
checks
Consistency checks are, of course, a crucial element
of probability assessment. The use of different
assessment methods will often reveal inconsistencies
that can then be fed back to the decision maker.
Indeed, the axioms of probability theory give no
guidance as to which is the best method for the
elicitation of subjective probability.
One way to answer this question is to use a single
method of assessing subjective probability that is
most consistent with itself. In other words, there
should be high agreement between the subjective
probabilities, assessed at different times by a single
assessor for the same event, given that the
assessors knowledge of the event is unchanged.
(3) Consistency and coherence
checks
One useful coherence check is to elicit
from the decision maker not only the
probability that an event will occur but
also the probability that it will not occur.
The two probabilities should, of course,
sum to one.
(3) Consistency and coherence
checks
Suppose that I assess the probabilities of a
set of mutually exclusive and exhaustive
events to be
0.001, 0.250, 0.200, 0.100, 0.279
It is then pointed out to me that these
probabilities sum to 0.830 and hence that the
assessment is incoherent.
We have to adjust the probabilities by adding
0.034 to each (= (1/5)(1 0.830)) to give
0.035, 0.284, 0.234, 0.134, 0.313
Homework 5:
Given below are the results of a survey of 100 cars:
Condition of brakes
Condition of tires Faulty Not faulty Total
Faulty 25 5 30
Not faulty 15 55 70
Total 40 60 100
(a) Assuming that the survey is representative of all the cars on the
road, what is the probability that a car selected at random will have:
(i) Faulty brakes;
(ii) Faulty tires;
(iii) Either faulty brakes or faulty tires;
(iv) Faulty brakes given that it has faulty tires;
(v) Faulty tires given that it has faulty brakes?
(b) What conclusion would you draw about the relationship
between the events faulty tires and faulty brakes?
The end