Probability
Probability
These concepts have been given an axiomatic mathematical formalization in probability theory, which is
used widely in areas of study such as statistics, mathematics, science, finance, gambling, artificial
intelligence, machine learning, computer science, game theory, and philosophy to, for example, draw
inferences about the expected frequency of events. Probability theory is also used to describe the
underlying mechanics and regularities of complex systems.[3]
Interpretations
When dealing with random experiments – i.e., experiments that are random and well-defined – in a purely
theoretical setting (like tossing a coin), probabilities can be numerically described by the number of desired
outcomes, divided by the total number of all outcomes. This is referred to as theoretical probability (in
contrast to empirical probability, dealing with probabilities in the context of real experiments). For example,
tossing a coin twice will yield "head-head", "head-tail", "tail-head", and "tail-tail" outcomes. The
probability of getting an outcome of "head-head" is 1 out of 4 outcomes, or, in numerical terms, 1/4, 0.25 or
25%. However, when it comes to practical application, there are two major competing categories of
probability interpretations, whose adherents hold different views about the fundamental nature of
probability:
Objectivists assign numbers to describe some objective or physical state of affairs. The most
popular version of objective probability is frequentist probability, which claims that the
probability of a random event denotes the relative frequency of occurrence of an
experiment's outcome when the experiment is repeated indefinitely. This interpretation
considers probability to be the relative frequency "in the long run" of outcomes.[4] A
modification of this is propensity probability, which interprets probability as the tendency of
some experiment to yield a certain outcome, even if it is performed only once.
Subjectivists assign numbers per subjective probability, that is, as a degree of belief.[5] The
degree of belief has been interpreted as "the price at which you would buy or sell a bet that
pays 1 unit of utility if E, 0 if not E",[6] although that interpretation is not universally agreed
upon.[7] The most popular version of subjective probability is Bayesian probability, which
includes expert knowledge as well as experimental data to produce probabilities. The expert
knowledge is represented by some (subjective) prior probability distribution. These data are
incorporated in a likelihood function. The product of the prior and the likelihood, when
normalized, results in a posterior probability distribution that incorporates all the information
known to date.[8] By Aumann's agreement theorem, Bayesian agents whose prior beliefs are
similar will end up with similar posterior beliefs. However, sufficiently different priors can
lead to different conclusions, regardless of how much information the agents share.[9]
Etymology
The word probability derives from the Latin probabilitas, which can also mean "probity", a measure of the
authority of a witness in a legal case in Europe, and often correlated with the witness's nobility. In a sense,
this differs much from the modern meaning of probability, which in contrast is a measure of the weight of
empirical evidence, and is arrived at from inductive reasoning and statistical inference.[10]
History
The scientific study of probability is a modern development of mathematics. Gambling shows that there has
been an interest in quantifying the ideas of probability throughout history, but exact mathematical
descriptions arose much later. There are reasons for the slow development of the mathematics of
probability. Whereas games of chance provided the impetus for the mathematical study of probability,
fundamental issues [note 2] are still obscured by superstitions.[11]
According to Richard Jeffrey, "Before the middle of the seventeenth century, the term 'probable' (Latin
probabilis) meant approvable, and was applied in that sense, univocally, to opinion and to action. A
probable action or opinion was one such as sensible people would undertake or hold, in the
circumstances."[12] However, in legal contexts especially, 'probable' could also apply to propositions for
which there was good evidence.[13]
The theory of errors may be traced back to Roger Cotes's Opera Miscellanea (posthumous, 1722), but a
memoir prepared by Thomas Simpson in 1755 (printed 1756) first applied the theory to the discussion of
errors of observation.[18] The reprint (1757) of this memoir lays down the axioms that positive and negative
errors are equally probable, and that certain assignable limits define the range of all errors. Simpson also
discusses continuous errors and describes a probability curve.
The first two laws of error that were proposed both originated with Pierre-Simon Laplace. The first law
was published in 1774, and stated that the frequency of an error could be expressed as an exponential
function of the numerical magnitude of the error – disregarding sign. The second law of error was proposed
in 1778 by Laplace, and stated that the frequency of the error is an exponential function of the square of the
error.[19] The second law of error is called the normal distribution or the Gauss
law. "It is difficult historically to attribute that law to Gauss, who in spite of his
well-known precocity had probably not made this discovery before he was two
years old."[19]
Daniel Bernoulli (1778) introduced the principle of the maximum product of the
probabilities of a system of concurrent errors.
In the nineteenth century, authors on the general theory included Laplace, Sylvestre Lacroix (1816),
Littrow (1833), Adolphe Quetelet (1853), Richard Dedekind (1860), Helmert (1872), Hermann Laurent
(1873), Liagre, Didion and Karl Pearson. Augustus De Morgan and George Boole improved the exposition
of the theory.
In 1906, Andrey Markov introduced[21] the notion of Markov chains, which played an important role in
stochastic processes theory and its applications. The modern theory of probability based on measure theory
was developed by Andrey Kolmogorov in 1931.[22]
On the geometric side, contributors to The Educational Times included Miller, Crofton, McColl,
Wolstenholme, Watson, and Artemas Martin.[23] See integral geometry for more information.
Theory
Like other theories, the theory of probability is a representation of its concepts in formal terms – that is, in
terms that can be considered separately from their meaning. These formal terms are manipulated by the
rules of mathematics and logic, and any results are interpreted or translated back into the problem domain.
There have been at least two successful attempts to formalize probability, namely the Kolmogorov
formulation and the Cox formulation. In Kolmogorov's formulation (see also probability space), sets are
interpreted as events and probability as a measure on a class of sets. In Cox's theorem, probability is taken
as a primitive (i.e., not further analyzed), and the emphasis is on constructing a consistent assignment of
probability values to propositions. In both cases, the laws of probability are the same, except for technical
details.
There are other methods for quantifying uncertainty, such as the Dempster–Shafer theory or possibility
theory, but those are essentially different and not compatible with the usually-understood laws of
probability.
Applications
Probability theory is applied in everyday life in risk assessment and modeling. The insurance industry and
markets use actuarial science to determine pricing and make trading decisions. Governments apply
probabilistic methods in environmental regulation, entitlement analysis, and financial regulation.
An example of the use of probability theory in equity trading is the effect of the perceived probability of
any widespread Middle East conflict on oil prices, which have ripple effects in the economy as a whole. An
assessment by a commodity trader that a war is more likely can send that commodity's prices up or down,
and signals other traders of that opinion. Accordingly, the probabilities are neither assessed independently
nor necessarily rationally. The theory of behavioral finance emerged to describe the effect of such
groupthink on pricing, on policy, and on peace and conflict.[24]
In addition to financial assessment, probability can be used to analyze trends in biology (e.g., disease
spread) as well as ecology (e.g., biological Punnett squares). As with finance, risk assessment can be used
as a statistical tool to calculate the likelihood of undesirable events occurring, and can assist with
implementing protocols to avoid encountering such circumstances. Probability is used to design games of
chance so that casinos can make a guaranteed profit, yet provide payouts to players that are frequent
enough to encourage continued play.[25]
Another significant application of probability theory in everyday life is reliability. Many consumer products,
such as automobiles and consumer electronics, use reliability theory in product design to reduce the
probability of failure. Failure probability may influence a manufacturer's decisions on a product's
warranty.[26]
The cache language model and other statistical language models that are used in natural language
processing are also examples of applications of probability theory.
Mathematical treatment
Consider an experiment that can produce a number of results. The
collection of all possible results is called the sample space of the
experiment, sometimes denoted as . The power set of the sample
space is formed by considering all different collections of possible
results. For example, rolling a die can produce six possible results.
One collection of possible results gives an odd number on the die.
Thus, the subset {1,3,5} is an element of the power set of the Calculation of probability (risk) vs
sample space of dice rolls. These collections are called "events". In odds
this case, {1,3,5} is the event that the die falls on some odd number.
If the results that actually occur fall in a given event, the event is
said to have occurred.
A probability is a way of assigning every event a value between zero and one, with the requirement that the
event made up of all possible results (in our example, the event {1,2,3,4,5,6}) is assigned a value of one.
To qualify as a probability, the assignment of values must satisfy the requirement that for any collection of
mutually exclusive events (events with no common results, such as the events {1,6}, {3}, and {2,4}), the
probability that at least one of the events will occur is given by the sum of the probabilities of all the
individual events.[27]
The opposite or complement of an event A is the event [not A] (that is, the event of A not occurring), often
denoted as , , or ; its probability is given by P(not A) = 1 − P(A).[30] As an example,
the chance of not rolling a six on a six-sided die is 1 – (chance of rolling a six) = 1 − 16 = 56 . For a more
comprehensive treatment, see Complementary event.
If two events A and B occur on a single performance of an experiment, this is called the intersection or joint
probability of A and B, denoted as
Independent events
If two events, A and B are independent then the joint probability is[28]
For example, if two coins are flipped, then the chance of both being heads is [31]
If either event A or event B can occur but never both simultaneously, then they are called mutually
exclusive events.
If two events are mutually exclusive, then the probability of both occurring is denoted as and
If two events are mutually exclusive, then the probability of either occurring is denoted as and
Rewritten,
For example, when drawing a card from a deck of cards, the chance of getting a heart or a face card
(J,Q,K) (or both) is since among the 52 cards of a deck, 13 are hearts, 12 are face
cards, and 3 are both: here the possibilities included in the "3 that are both" are included in each of the "13
hearts" and the "12 face cards", but should only be counted once.
This can be expanded further for multiple not (necessarily) mutually exclusive events. For three events, this
proceeds as follows:
It can be seen, then, that this pattern can be repeated for any number of events.
Conditional probability
Conditional probability is the probability of some event A, given the occurrence of some other event B.
Conditional probability is written , and is read "the probability of A, given B". It is defined by[32]
Inverse probability
In probability theory and applications, Bayes' rule relates the odds of event to event before (prior
to) and after (posterior to) conditioning on another event The odds on to event is simply the ratio
of the probabilities of the two events. When arbitrarily many events are of interest, not just two, the rule
can be rephrased as posterior is proportional to prior times likelihood, where
the proportionality symbol means that the left hand side is proportional to (i.e., equals a constant times) the
right hand side as varies, for fixed or given (Lee, 2012; Bertsch McGrayne, 2012). In this form it goes
back to Laplace (1774) and to Cournot (1843); see Fienberg (2005). See Inverse probability and Bayes'
rule.
Summary of probabilities
Summary of probabilities
Event Probability
not A
A or B
A and B
A given B
See also
Mathematics
portal
Philosophy portal
Contingency
Equiprobability
Fuzzy logic
Heuristic (psychology)
Notes
1. Strictly speaking, a probability of 0 indicates that an event almost never takes place,
whereas a probability of 1 indicates than an event almost certainly takes place. This is an
important distinction when the sample space is infinite. For example, for the continuous
uniform distribution on the real interval [5, 10], there are an infinite number of possible
outcomes, and the probability of any given outcome being observed — for instance, exactly
7 — is 0. This means that when we make an observation, it will almost surely not be exactly
7. However, it does not mean that exactly 7 is impossible. Ultimately some specific outcome
(with probability 0) will be observed, and one possibility for that specific outcome is exactly
7.
2. In the context of the book that this is quoted from, it is the theory of probability and the logic
behind it that governs the phenomena of such things compared to rash predictions that rely
on pure luck or mythological arguments such as gods of luck helping the winner of the
game.
References
1. "Kendall's Advanced Theory of Statistics, Volume 1: Distribution Theory", Alan Stuart and
Keith Ord, 6th Ed, (2009), ISBN 978-0-534-24312-8.
2. William Feller, An Introduction to Probability Theory and Its Applications, (Vol 1), 3rd Ed,
(1968), Wiley, ISBN 0-471-25708-7.
3. Probability Theory (http://www.britannica.com/EBchecked/topic/477530/probability-theory)
The Britannica website
4. Hacking, Ian (1965). The Logic of Statistical Inference. Cambridge University Press.
ISBN 978-0-521-05165-1.
5. Finetti, Bruno de (1970). "Logical foundations and measurement of subjective probability".
Acta Psychologica. 34: 129–145. doi:10.1016/0001-6918(70)90012-0 (https://doi.org/10.101
6%2F0001-6918%2870%2990012-0).
6. Hájek, Alan (21 October 2002). Edward N. Zalta (ed.). "Interpretations of Probability" (http://pl
ato.stanford.edu/archives/win2012/entries/probability-interpret/). The Stanford Encyclopedia
of Philosophy (Winter 2012 ed.). Retrieved 22 April 2013.
7. Jaynes, E.T. (2003). "Section A.2 The de Finetti system of probability". In Bretthorst, G. Larry
(ed.). Probability Theory: The Logic of Science (1 ed.). Cambridge University Press.
ISBN 978-0-521-59271-0.
8. Hogg, Robert V.; Craig, Allen; McKean, Joseph W. (2004). Introduction to Mathematical
Statistics (6th ed.). Upper Saddle River: Pearson. ISBN 978-0-13-008507-8.
9. Jaynes, E.T. (2003). "Section 5.3 Converging and diverging views". In Bretthorst, G. Larry
(ed.). Probability Theory: The Logic of Science (1 ed.). Cambridge University Press.
ISBN 978-0-521-59271-0.
10. Hacking, I. (2006) The Emergence of Probability: A Philosophical Study of Early Ideas about
Probability, Induction and Statistical Inference, Cambridge University Press, ISBN 978-0-
521-68557-3
11. Freund, John. (1973) Introduction to Probability. Dickenson ISBN 978-0-8221-0078-2 (p. 1)
12. Jeffrey, R.C., Probability and the Art of Judgment, Cambridge University Press. (1992). pp.
54–55 . ISBN 0-521-39459-7
13. Franklin, J. (2001) The Science of Conjecture: Evidence and Probability Before Pascal,
Johns Hopkins University Press. (pp. 22, 113, 127)
14. "Some laws and problems in classical probability and how Cardano anticipated them
Gorrochum, P. Chance magazine 2012" (http://www.columbia.edu/~pg2113/index_files/Gorr
oochurn-Some%20Laws.pdf) (PDF).
15. Abrams, William, A Brief History of Probability (https://web.archive.org/web/2017072405265
6/http://www.secondmoment.org/articles/probability.php), Second Moment, archived from the
original (http://www.secondmoment.org/articles/probability.php) on 24 July 2017, retrieved
23 May 2008
16. Ivancevic, Vladimir G.; Ivancevic, Tijana T. (2008). Quantum leap : from Dirac and Feynman,
across the universe, to human body and mind. Singapore ; Hackensack, NJ: World
Scientific. p. 16. ISBN 978-981-281-927-7.
17. Franklin, James (2001). The Science of Conjecture: Evidence and Probability Before
Pascal. Johns Hopkins University Press. ISBN 978-0-8018-6569-5.
18. Shoesmith, Eddie (November 1985). "Thomas Simpson and the arithmetic mean" (https://do
i.org/10.1016%2F0315-0860%2885%2990044-8). Historia Mathematica. 12 (4): 352–355.
doi:10.1016/0315-0860(85)90044-8 (https://doi.org/10.1016%2F0315-0860%2885%299004
4-8).
19. Wilson EB (1923) "First and second laws of error". Journal of the American Statistical
Association, 18, 143
20. Seneta, Eugene William. " "Adrien-Marie Legendre" (version 9)" (https://web.archive.org/we
b/20160203070724/http://statprob.com/encyclopedia/AdrienMarieLegendre.html). StatProb:
The Encyclopedia Sponsored by Statistics and Probability Societies. Archived from the
original (http://statprob.com/encyclopedia/AdrienMarieLegendre.html) on 3 February 2016.
Retrieved 27 January 2016.
21. Weber, Richard. "Markov Chains" (http://www.statslab.cam.ac.uk/~rrw1/markov/M.pdf)
(PDF). Statistical Laboratory. University of Cambridge.
22. Vitanyi, Paul M.B. (1988). "Andrei Nikolaevich Kolmogorov" (http://homepages.cwi.nl/~paul
v/KOLMOGOROV.BIOGRAPHY.html). CWI Quarterly (1): 3–18. Retrieved 27 January 2016.
23. Wilcox, Rand R. (2016). Understanding and applying basic statistical methods using R.
Hoboken, New Jersey. ISBN 978-1-119-06140-3. OCLC 949759319 (https://www.worldcat.o
rg/oclc/949759319).
24. Singh, Laurie (2010) "Whither Efficient Markets? Efficient Market Theory and Behavioral
Finance". The Finance Professionals' Post, 2010.
25. Gao, J.Z.; Fong, D.; Liu, X. (April 2011). "Mathematical analyses of casino rebate systems for
VIP gambling". International Gambling Studies. 11 (1): 93–106.
doi:10.1080/14459795.2011.552575 (https://doi.org/10.1080%2F14459795.2011.552575).
S2CID 144540412 (https://api.semanticscholar.org/CorpusID:144540412).
26. Gorman, Michael F. (2010). "Management Insights". Management Science. 56: iv–vii.
doi:10.1287/mnsc.1090.1132 (https://doi.org/10.1287%2Fmnsc.1090.1132).
27. Ross, Sheldon M. (2010). A First course in Probability (8th ed.). Pearson Prentice Hall.
pp. 26–27. ISBN 9780136033134.
28. Weisstein, Eric W. "Probability" (https://mathworld.wolfram.com/Probability.html).
mathworld.wolfram.com. Retrieved 10 September 2020.
29. Olofsson (2005) p. 8.
30. Olofsson (2005), p. 9
31. Olofsson (2005) p. 35.
32. Olofsson (2005) p. 29.
33. "Conditional probability with respect to a sigma-algebra" (https://www.statlect.com/fundamen
tals-of-probability/conditional-probability-as-a-random-variable). www.statlect.com.
Retrieved 4 July 2022.
34. Burgin, Mark (2010). "Interpretations of Negative Probabilities". p. 1. arXiv:1008.1287v1 (http
s://arxiv.org/abs/1008.1287v1) [physics.data-an (https://arxiv.org/archive/physics.data-an)].
35. Jedenfalls bin ich überzeugt, daß der Alte nicht würfelt. Letter to Max Born, 4 December
1926, in: Einstein/Born Briefwechsel 1916–1955 (https://books.google.com/books?id=LQIsA
QAAIAAJ&q=achtung-gebietend).
36. Moore, W.J. (1992). Schrödinger: Life and Thought. Cambridge University Press. p. 479.
ISBN 978-0-521-43767-7.
Bibliography
Kallenberg, O. (2005) Probabilistic Symmetries and Invariance Principles. Springer-Verlag,
New York. 510 pp. ISBN 0-387-25115-4
Kallenberg, O. (2002) Foundations of Modern Probability, 2nd ed. Springer Series in
Statistics. 650 pp. ISBN 0-387-95313-2
Olofsson, Peter (2005) Probability, Statistics, and Stochastic Processes, Wiley-Interscience.
504 pp ISBN 0-471-67969-0.
External links
Virtual Laboratories in Probability and Statistics (Univ. of Ala.-Huntsville) (http://www.math.u
ah.edu/stat/)
Probability (https://www.bbc.co.uk/programmes/b00bqf61) on In Our Time at the BBC
Probability and Statistics EBook (http://wiki.stat.ucla.edu/socr/index.php/EBook)
Edwin Thompson Jaynes. Probability Theory: The Logic of Science. Preprint: Washington
University, (1996). – HTML index with links to PostScript files (https://web.archive.org/web/2
0160119131820/http://omega.albany.edu:8008/JaynesBook.html) and PDF (http://bayes.wu
stl.edu/etj/prob/book.pdf) (first three chapters)
People from the History of Probability and Statistics (Univ. of Southampton) (http://www.econ
omics.soton.ac.uk/staff/aldrich/Figures.htm)
Probability and Statistics on the Earliest Uses Pages (Univ. of Southampton) (http://www.eco
nomics.soton.ac.uk/staff/aldrich/Probability%20Earliest%20Uses.htm)
Earliest Uses of Symbols in Probability and Statistics (http://jeff560.tripod.com/stat.html) on
Earliest Uses of Various Mathematical Symbols (http://jeff560.tripod.com/mathsym.html)
A tutorial on probability and Bayes' theorem devised for first-year Oxford University students
(http://www.celiagreen.com/charlesmccreery/statistics/bayestutorial.pdf)
U B U W E B :: La Monte Young (http://ubu.com/historical/young/index.html) pdf file of An
Anthology of Chance Operations (1963) at UbuWeb
Introduction to Probability – eBook (http://www.dartmouth.edu/~chance/teaching_aids/books
_articles/probability_book/book.html) Archived (https://web.archive.org/web/2011072720015
6/http://www.dartmouth.edu/~chance/teaching_aids/books_articles/probability_book/book.ht
ml) 27 July 2011 at the Wayback Machine, by Charles Grinstead, Laurie Snell Source (http
s://bitbucket.org/shabbychef/numas_text/) Archived (https://web.archive.org/web/201203251
35243/https://bitbucket.org/shabbychef/numas_text/) 25 March 2012 at the Wayback
Machine (GNU Free Documentation License)
(in English and Italian) Bruno de Finetti, Probabilità e induzione (http://amshistorica.unibo.it/
35), Bologna, CLUEB, 1993. ISBN 88-8091-176-7 (digital version)
Richard Feynman's Lecture on probability. (https://feynmanlectures.caltech.edu/I_06.html)