Idea of Random Variable

• Consider a random experiment of tossing a fair

coin twice.
• Suppose a person plays a game where
▪ he wins Rs. 100 if he gets at least one head in
two tosses, and
▪ he loses Rs. 200 otherwise.
• If the person keeps playing the game for a long
time, is he going to gain some money or loose?
• What is the long term gain or loss to the person.
• The probability of getting at least one head in
two tosses is
P({HH, HT ,TH})=3/4.
• So he has 75% chance of winning Rs. 100.
• But, at the same time, he could lose Rs. 200 with
25% chance.
• Now how to incorporate this idea of his gain (or
loss) along with the probability.
• We define X as his gain or profit in the same
game, then
▪ X takes the value 100 when he wins.
▪ X takes the value -200 when he looses.
• Now each of these outcomes is a part of the
sample space.
• So each of them has some specific probability to
happen.
• We write it more systematically as follows –

• Using the corresponding probabilities, we write

the same idea as

• Or
• This variable X is called random variable.
• Random Variable changes its value depending on
what we get as an outcome of a random
experiment.
• Each value of a random variable is associated with
a probability.
• A random variable is a rule for assigning numbers
to the possible outcomes of an experiment.
Symbolically they are denoted by capital letters
such as X, Y, or Z with or without subscripts and
the values taken by them are denoted by x, y, or z.
 Mathematical Definition
• Experiment ----> Outcome ----> Numerical
Value
▪ A random variable, X, maps the experimental
outcome to a real number.
▪ A random variable, X, is a numerical measure of
the outcomes of an experiment
▪ A random variable is a function that assigns a
numeric value to the outcomes of a random
experiment
▪ i.e., X : S →R,
• where S is the sample space, R is the real line (-∞, ∞).
 Example
• Consider the random experiment of tossing two
coins
✓Sample space: S = {HH, HT, TH, TT}
✓X is number of Heads appeared
✓X is a random variable
✓X can take any value out of 0,1 and 2.

➢P(X =0) = P{TT} = 1/4,

➢P(X =1) = P{HT, TH} = 2/4,
➢P(X =2) = P{HH} = 1/4.
 Example
• Consider the random experiment of tossing a fair die.
✓ Sample space: S = {1, 2, 3, 4, 5, 6}
✓ Let X be the value on the upper face of the die
✓ X could be 1, 2, 3, 4, 5 or 6
✓ The event of “getting 1” is same as saying “X=1”

So,
➢ P(getting 1) = P(X=1) = 1/6
➢ P(X=2) =1/6,
➢ P(X=3) = 1/6,
➢ P(X=4) = 1/6,
➢ P(X=5) = 1/6,
➢ P(X=6) = 1/6
 Example
• Consider the random experiment of tossing a
fair coin thrice.
✓Sample space
✓S={HHH, HHT, HTH, THH, HTT, THT, TTH, TTT}
✓X: no. of heads appearing in three tosses
✓X is a random variable.
✓X could be 0, 1, 2, or 3.

➢P(X = 0) = P(TTT) = 1/8

➢P(X=1) = P(HTT, THT, TTH) = 3/8
➢P(X=2) = P(HHT, HTH, THH) = 3/8
➢P(X=3) = P(HHH) = 1/8
 Same Example
• Consider the same example again.
✓S = {HHH, HHT, HTH, THH, HTT, THT, TTH, TTT}
✓X: no. of heads appearing in three tosses
✓X belongs to {0, 1, 2, 3}
✓Event of “getting at least one head” is same as “X ≥ 1”

▪ P(X ≥ 1) = P(HHH, HHT, HTH, THH, HTT, THT, TTH) = 7/8

▪ P(X ≤ 1) = P(HTT, THT, TTH, TTT) = 4/8
▪ P(X < 2) = P(HTT, THT, TTH, TTT) = 4/8
▪ P(X ≤ 2) = P(HHT, HTH, THH, HTT, THT, TTH, TTT)= 7/8
• In general,
▪ P(X = x) is the probability that X takes on the value x
and
▪ P(X ≤ x) is the probability that X takes on a value that
is less than or equal to x
▪ As sum of all probabilities is 1 we have:
o P(X ≤ x) = 1 – P(X > x)
o P(X ≥ x) = 1 – P(X < x)
Example:
Consider the random experiment of drawing two cards at
random from a well shuffled pack of 52 cards.
The sample space: S =

X: number of Diamond Cards selected

• X is a random variable.
• Find the probability of the event that at most one diamond
card is selected. P(X ≤ 1) = 15/16
• Find the probability of the event that exactly one diamond
card is selected. P(X = 1) = 6/16
 Some More Instances of Random Variable
• Number of defective ATMs in a city on a given
day.
• Number of employees absent on a day.
• Number of train accidents in a year on Indian
Railways due to collisions.
• Price of a stock.
• Monthly Earnings from Goods carried by
Indian Railways.
• Waiting time of a passenger for receiving
services in a computerized Booking Counter of
Indian Railways.
 Types of Random Variables
• Random Variables are of two types:
▪ Discrete Random Variable
▪ Continuous Random Variable
• Discrete Random Variable takes only a countable (finite
or countably infinite) number of values.
• no. of accounts opened,
• no. of cars sold,
• Friday night attendance at a cinema,
• no. of defective bulbs in a box, etc.
• Discrete random variables usually count the items.
• Range set of a discrete random variable is countable.
• Continuous Random Variable takes on any values within
an interval.
• weight of fertilizer packed in a bag,
• amount of sugar in an orange,
• time required to run a mile,
• price of a stock, etc.
• Continuous random variable is usually a measurement.
• It can take an uncountably infinite number of values.
• Range set of a continuous random variable is an
interval.
• It can be of types (-∞, ∞), (-∞, 0), (0, ∞) or (a, b).
Discrete random variable
 Probability Distribution of a Discrete Random
Variable
• Also called as Probability Mass Function (pmf).
• It is a mutually exclusive listing of all possible values of
the discrete random variable along with corresponding
probabilities.
All possible values of random variable X

Corresponding probabilities

• 0≤p(x)≤1 for all x.

• Together they sum up to 1.
Example:
• X is the number of heads appeared in two coins tossing
experiment.
• X is a discrete random variable having the probability distribution
probabilit y mass function of X is
1 / 4, if x = 0

p( x) = 2 / 4, if x = 1
1 / 4, if x = 2

0.6
Probabilities

0.5

0.4

0.3

0.2

0.1

0
x=0 x=1 x=2
• Example:
• In throwing a die, X is the value that appeared
• X is a discrete random variable having the probability distribution

probabilit y mass function of X is

p( x) = 1 / 6, if x = 1,2,3,4,5,6.

0.2
Probabilities

0.15

0.1

0.05

0
x=1 x=2 x=3 x=4 x=5 x=6
• Recall the first example where X is the random variable
denoting the gain and is given by

• In tabular format, the probability distribution of X is

given by

• Probability mass function of X is written as

3 / 4 if X = 100
p ( x) = 
1 / 4 if X = − 200
Example:
• Suppose an individual purchases two electronic
components
• Each of which may either be defective or acceptable.
• Sample space: S = {DD, DA, AD, AA}
• Given that P(DD) = 0.09, P(DA) = 0.21,
P(AD) = 0.21, P(AA) = 0.49.
• X: number of acceptable components.
• Obtain the probability distribution of X.
• What is the probability of getting at least one
acceptable components?
▪ Ans: 0.91
 Exercise
After watching a number of children playing games at a
video arcade, a statistics practitioner estimated the following
probability distribution of X, the number of games per visit.

X 1 2 3 4 5 6 7
p(X) .05 .15 .15 .25 .20 .10 .10

a. What is the probability that a child will play more than

four games?
b. What is the probability that a child will play at least two
games?

Sol: a) .40 b).95

Ex.1 Determine whether the following is a valid probability
distribution
X 0 1 2 3
p(x) .1 .3 .4 .1

Ex.2 The random variable X has the following prob. distribution

X -3 2 6 8
p(x) .2 .3 .4 .1

Find the following probabilities

a) P(X>0)
b) P(X≥1)
c) P(X≥2)
d) P(2≤X≤5)
Sol: a).8 b).8 c).8 d).3
 Expectation of a Discrete Random Variable
• “some sort of average” of all the values that the random
variable takes.

• Acts as the center of its distribution.

• Concept analogous to the physical concept of the center

of gravity of a distribution of mass.

• The expected value of a discrete random variable X is a

weighted average of the possible values that the random
variable can take. Here probability values act as weight.
• The mean of a random variable provides the long-run
average of the variable, or the expected average
outcome over many observations

• X is a discrete random variable having the pmf p(x)

• Expectation or Expected value or mean of X is given by

• Recall the first example where X is the random variable

denoting the gain

3 / 4 if x = 100
• pmf of X is p ( x) = 
1 / 4 if x = − 200
Expected gain of the person is
E(X) = (100)(3/4) + (-200)(1/4) = 25 Rupees

Laws of Expected Value

In general, if a and b are constants; and X and Y are
random variables, then we have

• E(a) = a

• E(aX) = aE(X)

• E(ax + bY) = aE(X) + bE(Y)

• E(X+a)=E(X)+a
Example: Suppose X is a discrete random variable having
following probability distribution
x -2 -1 0 1
p(x) 0.4 k 0.2 0.3
Find E(X).
▪ Ans: -0.6
Example:The number of pizzas delivered to university students
each month is a random variable with following probability
distribution.
X 0 1 2 3
P(x) .1 .3 .4 .2
Determine the mean number of pizzas delivered to students each
Month
Ans: 1.7
 Variance of a Discrete Random Variable
• The idea of center is not enough to summarize a
probability distribution.
• We need some idea of variability also.
• Variance of a random variable X is defined as

Var( X ) =  2
X 
= E ( X − E( X ))
2

( ) − E( X )
=E X 2 2

• It is the expected squared deviation of possible

values of X from its mean.
 E ( X 2 ) =  x 2 p( x) and E ( X ) =  x p( x),
x x

• where p(x) is the pmf of X.

• Note that Variance is always non-negative.
• Standard Deviation of X = σx = √[Var (X)]
Laws of Variance
If a and b are constants, X and Y are random variables,
then we have
▪ Var(a) = V(a)=0,
▪ Var(aX) = a2Var(X),
▪ Var(X+a)=Var(X),
▪ Var(aX + bY) = a2Var(X) + b2Var(Y) + 2ab σXY
▪ σXY is the covariance between X and Y.
(will be discussed later)
 Example: Suppose X is a discrete random variable having
following probability distribution
x -2 -1 0 1
p(x) 0.4 k 0.2 0.3
▪ Find Var(X).
▪ Ans: 1.64
Example: The number of pizzas delivered to university students
each month is a random variable with following probability
distribution.
X 0 1 2 3
P(x) .1 .3 .4 .2
Determine the variance of the number of pizzas delivered
Ans: .81
 EXERCISE
The monthly sales at a computer store have a mean of $25,000
and a standard deviation of $4,000. Profits are calculated by
multiplying sales by 30% and subtracting fixed costs of $6,000.
Find the mean and standard deviation of monthly profits
Solution
Relationship between profit and sales:
Profit=.30(Sales)-6,000
Expected or Mean profit is
E(Profit)=E[.30(Sales)-6,000]
E(Profit)=.30E(Sales)-6,000=.30(25,000)-6,000=1,500
The Variance is
V(Profit)=V[.30(Sales)-6,000]=(.3)2 V(Sales)=.09(4,000)2
=1,440,000
Thus, standard deviation of monthly profits is
σProfit = √1,440,000 = $1,200
 Exercise

You have a choice of receiving $500 in cash or receiving a

gold coin that has a face value of $100. However, the actual
value of the gold coin depends on its gold content. You are
told that the coin has a 40% probability of being worth $400,
a 30% probability of being worth $900, and a 30% probability
of being worth its face value. Basing your decision on
expected value, should you choose the coin?
Practice questions:

3.1, 3.2, 3.4, 3.5, 3.9, 3.10, 3.11, 3.12, 3.16, 3.21, 3.31

Solved Examples: 3.1, 3.2, 3.3