PROBABILITY How is Probability Useful? Making Probability Judgments. How Are Probabilities Determined?

How is Probability Useful? Evaluating situations and making decisions – how safe is this? – how big of a gamble is this? – is this event meaningful? Making inferences about a population based on a sample

Making Probability Judgments We tend to use heuristics in making probability judgments. Probability judgments can be influenced by the way the question is framed.

How Are Probabilities Determined? The list of all possible events that can occur in a situation is the outcome space. An accurate listing allows accurate calculations of probability.

How Are Probabilities Determined? When each event is equally likely:

An Example What is the probability of drawing an ace out of a 52 card deck? – outcome space = {2,2,2,2,3,3,3,3….} – #chances = 4 – #possible outcomes = 52 – p(Ace) = 4/52 = 1/13 =.08 = 8%

Facts About Probability Any probability must be between 0 and 1, or 0% and 100%. The total probability of all events in a given situation must add up to 1 or 100%.

How Are Probabilities Determined? The binomial expansion is a shortcut for finding probability when: – each trial has two possible outcomes – the probability of each outcome is constant across trials – the trials are independent of each other