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Lecture 6

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7 views

Lecture 6

Uploaded by

Sarah Alkindi
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Chapter 5

Probability Distributions and Data Modeling


Basic Concepts of Probability

• Probability is the likelihood that an outcome occurs. Probabilities


are expressed as values between 0 and 1.
• An experiment is the process that results in an outcome.
• The outcome of an experiment is a result that we observe.
• The sample space is the collection of all possible outcomes of an
experiment.
Definitions of Probability

Probabilities may be defined from one of three perspectives:


 Classical definition: probabilities can be deduced from theoretical
arguments
 Relative frequency definition: probabilities are based on empirical
data
 Subjective definition: probabilities are based on judgment and
experience
Example 5.1 Classical Definition of Probability
Roll 2 dice
 36 possible rolls (1,1), (1,2),…(6,5), (6,6)
 Probability = number of ways of rolling a number divided by 36;
e.g., probability of a 3 is 2/36

Suppose two consumers try a new product.


 Four outcomes:
1. like, like
2. like, dislike
3. dislike, like
4. dislike, dislike
 Probability at least one dislikes product = 3/4
Example 5.2: Relative Frequency Definition of
Probability

• Use relative frequencies as probabilities


• Probability a computer is repaired in 10 days = 0.076
Probability Rules and Formulas

• Label the n outcomes in a sample space as O1, O2, …, On, where Oi


represents the ith outcome in the sample space. Let P(Oi) be the probability
associated with the outcome Oi.
 The probability associated with any outcome must be between 0 and 1.
0 ≤ P(Oi) ≤ 1 for each outcome Oi (5.1)
 The sum of the probabilities over all possible outcomes must be equal to 1.
P(O1) + P(O2) + … + P(On) = 1 (5.2)
Probabilities Associated with Events

• An event is a collection of one or more outcomes from a sample


space.
• Rule 1. The probability of any event is the sum of the probabilities
of the outcomes that comprise that event.
Example 5.3: Computing the Probability of an Event
Consider the events:
 Rolling 7 or 11 on two dice
Probability = 6/36 + 2/36 = 8/36.

 Repair a computer in 7 days or less


Probability =
= O1 + O 2 + O 3 + O 4 + O 5 + O 6 + O 7
= 0 + 0 + 0 + 0 + .004 + .008 + .020
= 0.032
Complement of an Event

• If A is any event, the complement of A, denoted Ac, consists of all


outcomes in the sample space not in A.
• Rule 2. The probability of the complement of any event A is
P(Ac) = 1 – P(A).
Example 5.4: Computing the Probability of the
Complement of an Event

Dice example:
 A = {7, 11}
P(A) = 8/36
 Ac = {2, 3, 4, 5, 6, 8, 9, 10, 12}
 Using Rule 2:
P(Ac) = 1 − 8/36 = 28/36
Union of Events

• The union of two events contains all outcomes that belong to


either of the two events.
– If A and B are two events, the probability that some outcome in
either A or B (that is, the union of A and B) occurs is denoted as
P(A or B).
• Two events are mutually exclusive if they have no outcomes in
common.
• Rule 3. If events A and B are mutually exclusive, then
P(A or B) = P(A) + P(B).
Example 5.5: Computing the Probability of Mutually
Exclusive Events
Dice Example:
 A = {7, 11}: P(A) = 8/36
 B = {2, 3, 12}: P(B) = 4/36
 P(A or B) = Union of events A and B
= P(A) + P(B)
= 8/36 + 4/36 = 12/36
Non-Mutually Exclusive Events
• The notation (A and B) represents the intersection of events A and B
that is, all outcomes belonging to both A and B.

• Rule 4. If two events A and B are not mutually exclusive, then


P(A or B) = P(A)+ P(B) - P(A and B).

What about P(A or B or C)?


Example 5.6: Computing the Probability of Non-Mutually
Exclusive Events
Dice Example:
 A = {2, 3, 12}: P(A) = 4/36
 B = {even number} : P(B) = 18/36
 (A and B) = {2, 12}: P(A and B) = 2/36
 P(A or B) = P(A) + P(B)− P(A and B)
= 4/36 + 18/36− 2/36
= 20/36
Joint and Marginal Probability

• The probability of the intersection of two events is called a joint


probability.

• The probability of an event, irrespective of the outcome of the


other joint event, is called a marginal probability.
Application of Joint and Marginal Probability
• A sample of 100 individuals were asked to evaluate their preference for three new
proposed energy drinks in a blind taste test.

• The sample space consists of two types of outcomes corresponding to each individual:
gender (F = female or M = male) and brand preference (B1, B2, or B3).

• Define a new sample space consisting of the outcomes that reflect the different
combinations of outcomes from these two sample spaces.
– O1 = the respondent is female and prefers brand 1
– O2 = the respondent is female and prefers brand 2
– O3 = the respondent is female and prefers brand 3
– O4 = the respondent is male and prefers brand 1
– O5 = the respondent is male and prefers brand 2
– O6 = the respondent is male and prefers brand 3

• The probability of each of these events is the intersection of the gender and brand
preference event. For example, P(O1) = P(F and B1)
Example 5.7: Applying Probability Rules to Joint
Events
Energy Drink Survey
• The joint probabilities of gender and brand preference
• Excel: Create the table below using PivotTable)

Joint probabilities
Example 5.7: Applying Probability Rules to Joint
Events

Energy Drink Survey


• The joint probabilities of gender and brand preference are calculated by
dividing the number of respondents corresponding to each of the six outcomes
listed above by the total number of respondents, 100.
– E.g., P(F and B1) = P(O1) = 9/100 = 0.09
Example 5.7 Continued
• The marginal probabilities for gender and brand preference are
calculated by adding the joint probabilities across the rows and
columns

– E.g., the event F, (respondent is female) is comprised


of the outcomes and therefore

Joint Probability Table Brand 1 Brand 2 Brand 3 Grand Total

Female 0.09 0.06 0.22 0.37


Male 0.25 0.17 0.21 0.63
Grand Total 0.34 0.23 0.43 1
Joint/Marginal Probability Rule

• Calculations of marginal probabilities leads to the following


probability rule:

• Rule 5. If event A is comprised of the outcomes {A1, A2, …, An}


and event B is comprised of the outcomes {B1, B2, …, Bn}, then

P(Ai) = P(Ai and B1) + P(Ai and B2) + … + P(Ai and Bn)
Example 5.7 Continued
• Events F and M are mutually exclusive, as are events B1, B2, and B3 since a respondent may
be only male or female and prefer exactly one of the three brands. We can use Rule 3 to find,
for example, P(B1 or B2) = 0.34 + 0.23 = 0.57.
• Events F and B1, however, are not mutually exclusive because a respondent can be both
female and prefer brand 1. Therefore, using Rule 4, we have
P(F or B1) = P(F) + P(B1) – P(F and B1) = 0.37 + 0.34 – 0.09 = 0.62.
Conditional Probability

• Conditional probability is the probability of occurrence of one event


A, given that another event B is known to be true or has already
occurred. Mathematically: P(A|B)

• We read the notation P(A|B) as “the probability of A given B.”


Example 5.8 Computing a Conditional Probability in a
Cross-Tabulation
• Suppose we know a respondent is male. What is the probability that
he prefers Brand 1?
• Using cross-tabulation: Of 63 males, 25 prefer Brand 1, so the
probability of preferring Brand 1 given that a respondent is male =
25/63
• Using joint probability table: divide the joint probability 0.25 (the
probability that the respondent is male and prefers brand 1) by the
marginal probability 0.63 (the probability that the respondent is male).
Example 5.10: Using the Conditional Probability
Formula

 P(B1|M) = P(B1 and M)/ P(M) = (0.25)/(0.63) = 0.397

 P(B1|F) = P(B1 and F)/ P(F) = (0.09)/(0.37) = 0.243

Summary of conditional probabilities:


Example 5.9: Conditional Probability in Marketing
 Apple Purchase History
• The PivotTable shows the count of the
type of second purchase given that each
product was purchased first.
Probability of purchasing an
iPad given that a customer already
purchased an iMac = 2/13 (why?)

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