PROBABILITY CONCEPTS

WHAT IS PROBABILITY?

A probability is a measure of the likelihood that an event in the future will

happen. It can only assume a value between 0 and 1.
• A value near zero means the event is not likely to happen.
• A value near one means it is likely
 PROBABILITY
EXAMPLES

• P(Getting ‘1’ in a single toss of a die) = 1/6

• P(Getting ‘tails’ in a single toss of a coin) = 0.5
 ANOTHER EXAMPLE
There is a container full of colored bottles, red, blue, green and orange. Some
of the bottles are picked out and displaced. Cris did this 1000 times and got the
following results:
• No. of blue bottles picked out: 300
• No. of red bottles: 200
• No. of green bottles: 450
• No. of orange bottles: 50
What is the probability that Cris will pick a green bottle?
• Ans: For every 1000 bottles picked out, 450 are green.
• Therefore, P(green) = 450/1000 = 0.45
EXPERIMENTS, EVENTS AND OUTCOMES

• An experiment is the observation of some activity

or the act of taking some measurement.

• An outcome is the particular result of an

experiment.

• An event is the collection of one or more outcomes

of an experiment.
EXPERIMENTS, EVENTS AND OUTCOMES
Tossing coins Rolling dices

Experiments

Outcomes 2 x ‘Head’ 2 x ‘6’

1x‘Tail’ + 1x‘Head’ 1x‘5’ + 1x‘6’
1x‘Head’ + 1x‘Tail’ ……
2 x ‘Tail’ 1x‘1’ + 1x‘2’
2 x ‘1’
Events Observe 2 x ‘Head’ Observe 3 outcomes
Observe 2 x whereby the sum of
(1x‘Head’+ 1x‘Tail’) both die is more
than 10
ASSIGNING PROBABILITIES
There are three approaches of assigning probability:

• Classical
• Empirical
• Subjective
CLASSICAL PROBABILITY
Consider an experiment of rolling two six-sided die.
- What is the probability of the event “the sum of both die is more than
10”?
- P(sum of both die > 10) = 3/36

The possible outcomes are:

*Students to fill in the 36 possible outcomes as homework.

CLASSICAL PROBABILITY
Number of favorable outcomes
Probabilit y of an event 
Total number of possible outcomes

There are 3 possible outcomes in the collection of 36 equally likely

possible outcomes.
MUTUALLY EXCLUSIVE, INDEPENDENT,
COLLECTIVELY EXHAUSTIVE
• Events are mutually exclusive if the occurrence of any one event
means that none of the others can occur at the same time.

• Events are independent if the occurrence of one event does not

affect the occurrence of another.

• Events are collectively exhaustive if at least one of the events

must occur when an experiment is conducted.
EMPIRICAL PROBABILITY
Empirical Probability:
The probability of an event happening is the fraction of the time
similar events happened in the past.
• The key to establishing probabilities empirically is that more
observations will provide a more accurate estimate of the probability.
• The empirical approach to probability is based on what is called the
law of large numbers.

Law of Large Numbers:

Over a large number of trials the empirical probability of an
event will approach its true probability.
LAW OF LARGE NUMBERS
• Suppose we toss a fair die. The result Relative
of each roll is either ‘1’, ‘2’, ‘3’, ‘4’, Number of Number Frequency of
‘5’ or ‘6’. Trials of '1' '1'

1 0 0.00000
• If we roll the die a great number of
times, the probability of each outcome
will approach 1/6. 10 2 0.20000

50 8 0.16000
• The following table reports the results
of an experiment of rolling a fair die 100 17 0.17000
1, 10, 50, 100, 500, 1,000, 5000 and
10,000 times and then computing the 500 82 0.16400
relative frequency of ‘1’.
1000 165 0.16500
• Note that this result is not repeatable.
Why? 5000 850 0.17000
*Try repeating the experiment for ‘2’, up to 100
times. 10000 1655 0.16550
EMPIRICAL PROBABILITY
In 2006, there were floods experienced in parts of
Singapore, after exceptional heavy rainfall. This was the
second time in past 90 rainy days. On the basis of this
information, what is the probability that a future rainy day
would cause floods?

Number of flood during rainy days

Probabilit y of a flood 
Total number of rainy days
2
  0.022
90
SUBJECTIVE PROBABILITY
Subjective Concept of Probability:
The probability of a particular event happening that is assigned by an
individual based on whatever information is available.

• If there is little or no past experience or information on which to base a

probability, it may be arrived at subjectively.

• Examples of subjective probability are:

1. Estimating the likelihood the Singapore Soccer Team make it to
World Cup.
2. Estimating the likelihood that your neighbor will be married before
the age of 30.
3. Estimating the likelihood the Singapore budget surplus would
exceed $5B next year.
SUMMARY OF TYPES OF PROBABILITY
Approaches to Probability

Subjective Objective

Based on available
information Classical Probability Empirical Probability

Based on equally likely Based on relative

outcomes frequencies
PROBABILITY: RULES OF ADDITION
• Special Rule of Addition
If two events A and B are mutually
exclusive, the probability of one or the other
event’s occurring equals the sum of their Event A Event B

probabilities.
P(A or B) = P(A) + P(B)

P(A and B)
• General Rule of Addition
If A and B are two events that are not Event A Event B
mutually exclusive, then P(A or B) is given
by the following formula:
P(A or B) = P(A) + P(B) - P(A and B)
ADDITION RULE
• What is the probability that a card chosen at random from a
standard deck of cards will be either a queen or a club?
• P(A or B) = P(A) + P(B) - P(A and B)
Queen of Club
= 4/52 + 13/52 - 1/52
Club Queen

= 16/52, or .3077

Card Probability Explanation

Queen P(A) = 4/52 4 queens out of 52 cards

Club P(B) = 13/52 13 clubs out of 52 cards

1 queen of clubs out of 52
Queen of Club P(A and B) = 1/52 cards
COMPLEMENT RULE
The complement rule is used to determine the probability
of an event occurring by subtracting the probability of the
event not occurring from 1.
P(A) + P(A’ ) = 1
or P(A) = 1 - P(A’ ).

A’
JOINT PROBABILITY
JOINT PROBABILITY:
Probability that two or more events will happen
concurrently.

Queen of Club

Club Queen
PROBABILITY: RULE OF
MULTIPLICATION

• Special rule of multiplication

1. Two events A and B are independent.
2. Two events A and B are independent if the
occurrence of one has no effect on the probability
of the occurrence of the other.

• P(A and B) = P(A).P(B)

CONDITIONAL PROBABILITY
• Conditional probability is the probability of a
particular event (A) occurring, given that another
event (B) has occurred.

• When Event A occurs after Event B, and Event B

has an effect on the likelihood that Event A occurs,
then A and B are dependent.

• The probability of Event A given that Event B has

occurred is written P(A|B).
GENERAL MULTIPLICATION RULE
There are 12 colored balls in a jar. 9 of these balls are red and the others
blue. If we would to draw two balls consecutively, without replacement.
What is the likelihood both balls selected are red?
• The event that the first ball selected is red is
R1. The probability is P(R1) = 9/12
• The event that the second ball selected is also
red is identified as R2. The conditional
probability that the second ball selected is
red, given that the first ball selected is also
red, is P(R2 | R1) = 8/11.
• To determine the probability of 2 red ball
being selected we use formula: P(AnB) =
P(A).P(B|A)
• P(R1 and R2)
= P(R1).P(R2 |R1) = (9/12)(8/11) = 0.55
 CONTINGENCY TABLES
Contingency Table used to classify sample observations according to two
or more identifiable characteristics.
0 1 2 3 or more
Number of Credit Cards (B1) (B2) (B3) (B4) Total

Men (A1) 2 4 3 3 12

Women (A2) 4 3 6 5 18

Total 6 7 9 8 30

What is the probability of a randomly selected person is a women and does not
have any credit cards?
•Event B1 happens if a randomly selected person does not have any credit cards.
P(B1) = 6/30, or 0.2.
• Event A2 happens if a randomly selected person is a women.
P(A2) = 18/30, or 0.6.
• Of the 18 women, 4 do not have credit cards. P(B1 | A2) is the conditional
probability that women do not have any credit cards,
P(B1 |A2) = 4/18
P(A2 and B1) = P(A2).P(B1 |A2) = 18/30 *4/18 = 4/30
TREE DIAGRAMS

A tree diagram is useful for illustrating conditional and joint

probabilities. It is particularly useful for analyzing decisions
and organizing calculations involving several stages. Each
segment is one stage of the problem. The branches of a tree
diagram are weighted probabilities.
TREE DIAGRAM
Conditional Credit Joint
Probabilities Card Probabilities

Gender 0 credit card 12/30 * 2/12 = 2/30

2/12
4/12 1 credit card 12/30 * 4/12 = 4/30
Men
3/12 2 credit card 12/30 * 3/12 = 3/30
12/30
3/12 >3 credit card 12/30 * 3/12 = 3/30

0 credit card 18/30 * 4/18 = 4/30

4/18
18/30
3/18 1 credit card 18/30 * 3/18 = 3/30
Women
6/18 2 credit card 18/30 * 6/18 = 6/30
5/18 >3 credit card 18/30 * 5/18 = 5/30

Must Be Equal to 1.00

BAYES’ THEOREM

• Bayes' theorem relates the conditional and prior probabilities

of random events.
P(Ai).P(B | Ai)
P(Ai | B) 
P(A1).P(B | A1)  P(A2).P(B | A2)  ...  P(An).P(B | An)

• Prior Probability: The initial probability based on the present

level of information.

• Posterior Probability: A revised probability based on

additional information.
BAYES’ THEOREM
• WHO suspected that 5% of Country A’s population are infected with flu.
• A1: Event that person has flu
• P(A1) = 0.05
• A2: Event that person does not have flu
• P(A2) = 1-P(A1) = 0.95
• There is a diagnostic test available to detect the disease, but its accuracy is 90%.
• Event that person has flu and detected by test
• P(B|A1) = 0.9
• Event that person does not has flu, but detected by test
• P(B|A2) = 0.15 P(A1).P(B | A1)
P(A1 | B) 
P(A1).P(B | A1)  P(A2).P(B | A2)
0.05 * 0.9
  0.24
0.05 * 0.9  0.95 * 0.15

• When we randomly select a person and he is tested positive. What is the probability the person
actually has flu?
• Find, P(person has flu | test is positive)
• Symbolically, P(A1|B)
 Bayes’ Theorem

The above example illustrated the application of Bayes’

Theorem to only two mutually exclusive and collectively
exhaustive events, A1 and A2. If there are n such events,
A1, A2, …, An, Bayes’ Theorem becomes:

P(Ai).P(B | Ai)
P(Ai | B) 
P(A1).P(B | A1)  P(A2).P(B | A2)  ...  P(An).P(B | An)
MULTIPLICATION
The multiplication formula indicates that if there are m ways of doing one
thing and n ways of doing another thing, there are m x n ways of doing
both.
Multiplication Formula:
Total number of arrangements = (m)(n)
Example:
A wife told her husband that she needed 10 sets of clothing, so that she
would be able to ‘survive’ a two week cycle, without repeating the same
set of clothes. Her husband disagreed and said that the same could be
achieved with the following:
• 5 shirts and 2 pants/skirts
• 2 shirts and 5 pants/skirts
PERMUTATION
Permutation: Any arrangement of r objects selected from a
single group of n possible objects. The order of arrangement
is important in permutations.

Permutation Formula:

n!
nP r 
(n - r)!
Where:
n is the total number of objects.
r is the number of objects selected.
PERMUTATION
During a S-League match, Coach A had to select 3 players as
‘defender’, out of 11 players. How many ways can the 11
players be arranged in the 3 ‘defender’ positions?

11!
11 P 3   990
(11  3)!
COMBINATION
Combinations: The number of ways to choose r objects from
a group of n objects without regard to order.

Combination Formula:

n!
nCr 
r!(n - r)!
Where:
n is the total number of objects.
r is the number of objects selected.
COMBINATION
There are 18 players on the Foxtrot soccer team. Coach A
must pick 11 players among the 18 players to comprise the
starting team. How many different groups are possible?

18!
18 C11   31824
11!(18  11)!