ANALYSIS OF DATA

LOGISTICS

Teaching

Apratim Guha (AG): First 10 sessions Probability and

Statistical Inference
apratim@iima.ac.in Ph: 4803
Dhiman Bhadra (DB): Last 5 sessions Regression
Techniques
dhiman@iima.ac.in Ph: 4893

Grading

Grade components:
CP: 10%

Quiz (based on first 4 sessions, Probability) : 20%

Midterm (based on first 10 sessions, Probability and

Inference): 40%
Endterm (based on last 5 sessions, Regression): 30%

ANALYSIS OF DATA
Probability Session 1

Basic Concepts-I

An experiment is an occurrence whose result, or outcome,

is uncertain.
The set of all possible outcomes is called the sample space
for the experiment.

Example

One Die
Two Dice

10

Basic Concepts-II

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Given a sample space S, an event E is a subset of S.

The outcomes in E are called the favourable outcomes.

We say that E occurs in a particular experiment if the

outcome of that experiment is one of the elements of E.

Examples

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When a fair die is rolled, probability of each outcome is 1/6.

So probability of E: Even numbers is P(E) = 3/6 = 0.5.

But a die does not need to be fair, and outcomes are not

always equally likely!

For example, suppose we have a loaded die with
probabilities of 1, 2, 3, 4, 5 and 6 resp. 0.25, 0.15, 0.15, 0.15,
0.15 and 0.15.
Then P(E) = 0.45.

Basic Concepts

13

For any event A:

i) 0 P(A) 1.
ii) P() = 0, where is the null event (no outcomes).
iii) P(S) = 1, where S is the sample space (all outcomes).
iv) If A and B are two events with no common outcome, (i.e.
mutually exclusive) then
P(A B) P(A) P(B)

v) If A and B are two mutually exclusive events such that

P(A B) 1 then A and B are called complements of each
other. We denote B as A or AC.

General Formula
P(A B) P(A) P( B) P(A B)

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Example

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Consider the fair die being rolled twice

P(sum is even) =

P(product is odd) =

P(sum is even, product is odd) =

Re-compute the probabilities for the loaded die.

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A 17-th Century Puzzle from France

Complementation Method

Compute the probability of the complement A

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Use the fact the sum of probabilities of an event and its

complement add up to 1: P(A) 1 P( A)

Now work out the problem!