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Conditional Probability1

conditional probability

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Harshitha Babu
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12 views

Conditional Probability1

conditional probability

Uploaded by

Harshitha Babu
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Conditional Probability

What is Conditional Probability?


A conditional probability refers to the probability of an event A
occurring, given that another event B has occurred.
Notation: P(A | B)
Read this as the “conditional probability of A given B” or the
“probability of A given B.”
Conditional probabilities are especially useful in economic analysis
because probabilities of an event differ, depending on other events
occurring.
Formulae for Conditional
Probabilities
The conditional probability of A given B is

P( A  B)
P( A B) 
P( B)
The conditional probability of B given A is

P( A  B)
P( B A) 
P ( A)
Example of conditional probabilities
from student survey
Probability that each major has low skill level?
P(L  MA) = P(L  MA) / P(MA) = (2/46) / (6/46) = 2/6 = 0.333
P(L  B) = 3 / 13 = 0.231
P(L  E) = 0.500
P(L  O) = 0.333
If a student has a high skill level is Excel, what is the probability his or
her major is Business? Other?
P(B  H) = P(B  H) / P(H) = (3/46) / (6/46) = 3/6 = 0.500
P(O  H) = 0.167
Number of students by major and
Excel skill level
This table contains the same data as examined earlier, but reorganized
as a table rather than in a tree diagram.
Independent and dependent events
Two events A and B are independent if
P(A | B) = P(A) or P(B | A) = P(B).
That is, the probability of one event is not altered by whether
or not the other event occurs.
If P(A | B) = P(A), then P(B | A) = P(B), and vice-versa.

Two events A and B are dependent if


P(A | B) ≠ P(A) or P(B | A) ≠ P(B).
In this case, the occurrence of one event affects the
probability of the other event.

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