Session: Introduction to Probability

Introduction
Sample
Life is uncertain. Experiment
space
• We are not sure what the future will bring.

• Probability is a numerical statement about the likelihood that an event will occur.
Event
• Two basic rules:

1. The probability, P, of any event or state of nature occurring is greater than or equal
to 0 and less than or equal to 1. That is,

0 ≤ P(event) ≤ 1
2. The sum of the simple probabilities for all possible outcomes of an activity must
equal 1.
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Types of probabilities

Objective Subjective
approach approach

Opinion polls
Empirical or
Relative
frequency

Judgment of
experts
Classical or
logical method

Delphi method
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 Types of probabilities…
• Objective approach
Number of occurrences of the event
1. Relative frequency approach P (event) =
Total number of trials or outcomes

• Example
Historical demand for white latex paint at = 0, 1, 2, 3, or 4 gallons per day
Observed frequencies over the past 200 days

Quantity demanded Number of days Probability

(Gallons)
0 40 0.20(= 40÷200)
Individual probabilities are all between 0 and 1 1 80 0.40(= 80÷200)
0 ≤ P (event) ≤ 1 2 50 0.25(= 50÷200)
3 20 0.10(= 20÷200)
Total of all event probabilities equals 1
4 10 0.05(= 10÷200)
∑ P (event) = 1.00 Total 200 1.00(= 200÷200) 4
Types of probabilities…
• Objective approach
2. Classical or Logical method

 Experiment 1: Tossing an unbiased coin

𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁 𝑜𝑜𝑜𝑜 𝑤𝑤𝑤𝑤𝑤𝑤𝑤𝑤 𝑔𝑔𝑔𝑔𝑔𝑔𝑔𝑔𝑔𝑔𝑔𝑔𝑔𝑔 𝑎𝑎 ℎ𝑒𝑒𝑒𝑒𝑒𝑒
𝑃𝑃 𝐻𝐻 =
𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁 𝑜𝑜𝑜𝑜 𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝 𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜
1
𝑃𝑃 𝐻𝐻 =
2
 Experiment 2: Drawing a card from a deck of 52 playing cards
𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁 𝑜𝑜𝑜𝑜 𝑤𝑤𝑤𝑤𝑤𝑤𝑤𝑤 𝑔𝑔𝑔𝑔𝑔𝑔𝑔𝑔𝑔𝑔𝑔𝑔𝑔𝑔 𝑎𝑎 𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠
𝑃𝑃 𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆 =
𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁 𝑜𝑜𝑜𝑜 𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝 𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜

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𝑃𝑃 𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆 =
52

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Types of probabilities…

• Subjective approach

Based on the experience and judgment of the person making the estimate
Opinion polls
Judgment of experts
Delphi method

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Terminology
• Mutually exclusive
Events are said to be mutually exclusive if only one of the events can occur on any
one trial.
Tossing a coin will result in either a head or a tail.
Rolling a die will result in only one of six possible outcomes.

• Collectively exhaustive
Events are said to be collectively exhaustive if the list of outcomes includes every
possible outcome.
Both heads and tails as possible outcomes of coin flips.
All six possible outcomes of the roll of a die.

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Terminology: Example
Draw one card from a deck of 52 playing cards.
Mutually
A = event that a 7 is drawn exclusive?
B = event that a heart is drawn

P (a 7 is drawn) = P(A)
Collectively
= 4/52 = 1/13 exhaustive?
P (a heart is drawn) = P(B)
= 13/52 = 1/4

These two events are not mutually exclusive since a 7 of hearts can be drawn.

These two events are not collectively exhaustive since there are other cards in
the deck besides 7s and hearts.
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Terminology…
• Venn diagrams

S U
Mutually exclusive events Events that are not mutually exclusive

Sample space / Universal set

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 Terminology…

Draws Mutually exclusive Collectively exhaustive

1. Draws a spade and a club Yes No
2. Draw a face card and a number card Yes Yes
3. Draw an ace and a 3 Yes No
4. Draw a club and a non-club Yes Yes
5. Draw a 5 and a diamond No No
6. Draw a red card and a diamond No No

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Terminology…
• Intersection of events

The set of all outcomes that are common to both events

Intersection of event A and event B
= A and B
=A∩B
= AB
Probability notation
P(Intersection of event A and event B)
= P(A and B)
= P(A ∩ B) S

= P(AB)
Sometimes called as joint probability.
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Terminology…
• Union of events

The set of all outcomes that are contained in either of two events
Union of event A and event B
= A or B
=A∪B

Probability notation
P(Union of event A and event B)
= P(A or B)
= P(A ∪ B) S

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Terminology…
• Complement of event

The set of all outcomes that are contained in S but not in the event
Complement of event A
= Ac
=S-A

Probability notation
P(Complement of event A)
= P(Ac)
S

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Terminology: Example
Draw one card from a deck of 52 playing cards.

A = event that a 7 is drawn

B = event that a heart is drawn
P(A ∪ B)?
P (a 7 is drawn) = P(A) = 4/52 = 1/13
P (a heart is drawn) = P(B) = 13/52 = 1/4

Union of event A and event B

= (A or B)
= either a 7 or a heart is drawn
P (A ∪ B)
= 16/52
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Terminology: Example
Draw one card from a deck of 52 playing cards.

A = event that a 7 is drawn

B = event that a heart is drawn
P(A ∩ B)?
P (a 7 is drawn) = P(A) = 4/52 = 1/13
P (a heart is drawn) = P(B) = 13/52 = 1/4

Intersection of event A and event B

= (A and B)
= the 7 of hearts is drawn
P (A ∩ B)
= 1/52
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Probability rules
• General rule for union of two events / Addition rule

P(A or B) = P(A) + P(B) − P(A and B)

P(A ∪ B) = P(A) + P(B) – P(A ∩ B)

• Example:
Draw one card from a deck of 52 playing cards.

A = event that a 7 is drawn

B = event that a heart is drawn P(A ∪ B)?

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Probability rules…
• Conditional probability

Probability that an event occurs given another event has already happened

𝑃𝑃 𝐴𝐴 ∩ 𝐵𝐵 𝑃𝑃 𝐴𝐴𝐴𝐴
𝑃𝑃 𝐴𝐴 𝐵𝐵 = =
𝑃𝑃 𝐵𝐵 𝑃𝑃 𝐵𝐵

Probability of a 7 given a heart has been drawn?

1
P ( AB )
P( A | B) = = 52 = 1
P (B ) 13 13
52

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Probability rules…

• General rule for intersection of two events / Multiplication rule

𝑃𝑃 𝐴𝐴 ∩ 𝐵𝐵 = 𝑃𝑃 𝐴𝐴 𝐵𝐵 𝑃𝑃 𝐵𝐵 = 𝑃𝑃 𝐵𝐵 𝐴𝐴 𝑃𝑃 𝐴𝐴

Probability of a 7 of a heart has been drawn?

• The complement rule

𝑃𝑃 𝐴𝐴𝑐𝑐 = 𝑃𝑃 𝐴𝐴′ = 1 − 𝑃𝑃 𝐴𝐴

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Probability rules: Example

A manager at Moksha Yoga Center believes that 37% of female and 30% of male
open-house attendees she contacts will purchase a membership.

a. What is the probability that a randomly selected female contacted by the

manager will not purchase a membership?

0.63

b. What is the probability that a randomly selected male contacted by the

manager will not purchase a membership?

0.70
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Probability rules: Example

Shikha feels that she has a 75% chance of getting an A in Statistics and a 55%
chance of getting an A in Managerial Economics.

She also believes she has a 40% chance of getting an A in both classes.

a. What is the probability that she gets an A in at least one of these courses?

0.90

b. What is the probability that she does not get an A in either of these courses?

0.10
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Probability rules: Example

A manager believes that 14% of customers will respond positively to the firm’s
social media campaign. Also, 24% of those who respond positively will become
loyal customers.

What is the probability that the next recipient of its social media campaign will
react positively and will become a loyal customer?

0.0336

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Probability rules…

Which sets are independent?

1. (a) Your education

(b) Your income level
2. (a) Draw a jack of hearts from a full 52-card deck
(b) Draw a jack of clubs from a full 52-card deck
3. (a) Virat Kohli’s performance in IPL
(b) Virat Kohli’s performance in T20 WC
4. (a) Snow in Kashmir, India
(b) Rain in Tel Aviv, Israel

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Probability rules…
• Independent events
one event has no effect on the other event

𝑃𝑃 𝐴𝐴 𝐵𝐵 = 𝑃𝑃(𝐴𝐴)

𝑃𝑃 𝐴𝐴 ∩ 𝐵𝐵
𝑃𝑃 𝐴𝐴 𝐵𝐵 =
𝑃𝑃 𝐵𝐵

𝑃𝑃 𝐴𝐴 ∩ 𝐵𝐵 = 𝑃𝑃 𝐴𝐴 𝑃𝑃(𝐵𝐵)

Example: For a fair coin tossed twice

A = event that a head is the result of the first toss
P(A ∩ B)?
B = event that a head is the result of the second toss

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Probability rules: Example
• A bucket contains 3 black balls and 7 green balls

• Draw a ball from the bucket, replace it, and draw a

second ball
1. The probability of a black ball drawn on first draw is: P(B) = 0.30
2. The probability of two green balls drawn is: P(GG) = P(G) × P(G)
3. The probability of a black ball drawn on the second = 0.7 × 0.7 = 0.49
draw if the first draw is green is: P(B | G) = P(B) = 0.30
4. The probability of a green ball drawn on the second
draw if the first draw is green is: P(G | G) = P(G) = 0.70

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Probability rules: Example
• Dependent events
P(WL) 4 balls White (W)
= 4/10 = 0.4 and Lettered (L)
P(YL)
= 3/10 = 0.3
P(WN) The conditional 2 balls White (W)
= 2/10 = 0.2 probability that the The urn and Numbered (N)
P(YN) ball drawn is contains
= 1/10 = 0.1 lettered, given that 10 balls
P(W) it is yellow 3 balls Yellow (Y)
= 6/10 = 0.6 and Lettered (L)
P(L) P (YL ) 0.3
= 7/10 = 0.7 P (L | Y ) = = = 0.75
P (Y ) 0.4 1 ball Yellow (Y) and
P(Y)
= 4/10 = 0.4 Numbered (N)
P(N)
= 3/10 = 0.3 25
Probability rules: Example

Suppose that for a given year there is a 2% chance that your desktop computer will
crash and a 6% chance that your laptop computer will crash.

Moreover, there is a 0.12% chance that both computers will crash.

Is the reliability of two computers independent of each other?

Yes

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Revising the probabilities

[Link]
=TED-Ed

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Revising the probabilities

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 Revising the probabilities…

Inputs Outputs

Prior probabilities P(Y) P(Y | +)

P(N) P(N | +)
Posterior probabilities
P(+ | Y) P(Y | -)
Additional info
P(- | N) P(N | -)

P(+)
P(-)
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Revising the probabilities…
• Bayes’ theorem incorporates initial estimates and information about the accuracy
of the sources
• Allows the revision of initial estimates based on new information

• Calculating posterior probabilities

P (B | A ) × P ( A )
P( A | B) =
P (B | A) × P ( A) + P (B | A′) × P ( A′)

where
A, B = any two events
A’ = complement of A

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Revising the probabilities: Exercise
• A cup contains two dice identical in appearance.

• One is fair (unbiased) and the other is loaded (biased).

• The probability of rolling a 3 on the fair die is 1/6 or 0.166.

• The probability of tossing the same number on the loaded die is 0.60.

• We select one by chance (randomly), toss it, and get a 3.

• What is the probability that the die rolled was fair?

• What is the probability that the loaded die was rolled?

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Revising the probabilities: Exercise…
• The probability of the die being fair or loaded is
P(fair) = 0.50 P(loaded) = 0.50
And that
P(3 | fair) = 0.166 P(3 | loaded) = 0.60

• The probabilities of P(3 and fair) and P(3 and loaded) are
P(3 and fair) = P(3 | fair) × P(fair)
= (0.166)(0.50) = 0.083
P(3 and loaded) = P(3 | loaded) × P(loaded)
The sum of these = (0.60)(0.50) = 0.300
probabilities gives us the
unconditional probability P(3) = 0.083 + 0.300 = 0.383
of tossing a 3 32
Revising the probabilities: Exercise…
• If a 3 does occur,

• The probability that the die rolled was the fair one is

P ( fair and 3 ) 0.083

P (fair | 3) = = = 0.22
P (3) 0.383

• The probability that the die was loaded is

P ( loaded and 3 ) 0.300

P (loaded | 3) = = = 0.78
P (3) 0.383

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Further probability revisions
• Additional information from a second experiment
If you can afford it, perform experiments several times

We roll the die again and again to get a 3

P(fair) = 0.50 and P(loaded) = 0.50

P(3,3|fair)

= (0.166) (0.166) = 0.027

P(3,3|loaded)

= (0.6) (0.6) = 0.36

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 Further probability revisions…
P(3, 3 and fair) = P(3, 3 fair) × P(fair)
= (0.027)(0.5) = 0.013

P(3, 3 and loaded) = P(3, 3|loaded) × P(loaded)

= (0.36)(0.5) = 0.18

P (3, 3 and fair) 0.013 P ( fair and 3 ) 0.083

P (fair 3, 3) = = = 0.067 P (fair | 3) = = = 0.22
P (3, 3) 0.193 P (3) 0.383
P (3, 3 and loaded) 0.18 P ( loaded and 3 ) 0.300
P (loaded 3, 3) = = = 0.933 P (loaded | 3) = = = 0.78
P (3, 3) 0.193 P (3) 0.383

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 Thank you!

Questions/Comments?

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