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An
Introduc2on
Applied
Sta+s+cs
and
Compu+ng
Lab
Indian
School
of
Business
Learning
Goals
Random
Experiments
Sample
Space
Events
The
idea
of
chance
Probability
of
Events
Axioms
of
Probability
Few
results
on
Probability
of
Events
2
Random
Experiment
In
the
ATP
Cincinna+
2013
nal:
Rafael
Nadal
vs
John
Isner,
Nadal
beat
Isner
to
become
the
champion.
Let
us
pick
apart
this
informa2on
a
liGle.
Before
the
nal
was
played
we
knew
there
were
two
possibili2es
:
Nadal
Wins
or
Nadal
Loses
In
a
way
this
match
is
like
conduc2ng
some
experiment
that
results
in
one
of
two
possible
outcomes
Set
of
these
possible
outcomes
is
well
dened
In
principle,
this
match
could
be
played
again
and
again
under
the
same
condi2ons
but
the
set
of
possible
outcomes
remains:
{Nadal
Wins
,
Nadal
Loses}
In
sta2s2cs
we
call
such
a
process
a
Random
Experiment,
a
formal
deni2on
is:
A
Random
Experiment
is
any
procedure
that:
Has
more
than
one
possible
outcomes
This
set
of
possible
outcomes
is
well-dened
Can
be
repeated
under
the
same
condi2ons
to
generate
the
same
set
of
outcomes
Applied
Sta+s+cs
and
Compu+ng
Lab
Probability
We
knew
before
the
nals
that
Nadal
will
Win
or
Nadal
will
Lose:
Did
we
know
with
certainty
which
of
these
events
would
take
place?
No!
All
we
knew
was
there
there
was
a
chance
that
Nadal
would
win
Intui2vely
he
had
a
chance
of
one
in
two,
i.e
50-50
on
winning
and
losing
the
match
In
theory
we
call
this
idea
of
chance,
Probability,
a
quan2ta2ve
measure
of
uncertainty
We
say
Nadal
had
a
50%
or
or
0.5
probability
of
winning
(or
losing)
the
match
The
idea
here
is
that,
if
Nadal
and
Isner
played
this
match
many
2mes
under
the
exact
same
condi2ons,
the
rela2ve
frequency
of
Nadal
winning(i.e.
the
number
of
2mes
Nadal
wins
as
a
propor2on
of
the
total
number
of
games
played)
is
Similarly
the
probability
of
Isner
winning
is
Probability:
Dened
What
is
the
probability
that
Nadal
will
win
the
nal?
We
have
already
understood
that
intui2vely
the
probability
of
this
event
is
Let
us
look
at
a
deni2on
for
Probability
of
an
Event
E
n( E ) P(E ) = n( S )
Where
n(E)=number
of
elements
in
set
E
n(S)=number
of
elements
in
the
Sample
Space
We
have
our
Sample
Space
S1
={WW,WLL,WLW,LWW,LWL,LL}
E=
Nadal
Wins
the
match
=
{WW,
WLW,LWW}
,
n(E)=3
,n(S1)
=
6
3 1 So
we
have
that
P(E)=
= 6 2
7
Axioms
of
Probability
The
Axioms
of
probability
are
certain
assump2ons
that
are
made
in
Probability
Theory,
though
they
are
merely
assump2ons
we
will
see
that
they
strongly
appeal
to
our
intui2on.
Consider
a
Random
Experiment
whose
sample
Space
is
S,
we
dene
the
following
axioms
on
the
probability
of
an
event
E
in
S
Axiom
1
0
P(E)
1
P(E)=0
Event
E
will
not
occur
with
certainty
E:
Nadal
won
the
rst
three
sets
(A
third
set
wasnt
played!)
E:
{}
,
P(E)=1
Event
E
will
occur
with
certainty,
i.e.
E
is
a
sure
event
E:
Isner
played
two
sets
in
the
nal
E:
Sample
Space
An
important
idea
in
Probability
is
that,
1
is
taken
as
the
whole
and
parts
of
this
1
are
the
dierent
probabili2es
Instead
of
1
it
could
have
been
any
other
number!
All
we
had
to
do
was
standardize
it
so
that
the
whole
is
1
(
i.e.
by
dividing
by
this
number)
n( E ) Even
using
the
deni2on
of
probability
P
(
E
)
=
,
we
see
that
the
whole
is
1
because
the
maximum
value
n(E)
can
n( S ) take
is
n(S)
Axiom
3
Let
E1,E2
..
be
a
sequence
of
Mutually
Exclusive
events,
i.e.
EiEj=
for
all
ij,
then
P( E ) = P( E )
i i i=1 i=1
10
11
12
p
i =1
=1
13
More
Examples
A
stock
broker
is
interested
in
the
stock
price
of
a
par2cular
stock
tomorrow
It
goes
up
with
a
probability
p
Goes
down
or
remains
the
same
with
probability
1-p
In
a
rm
with
300
employees,
200
are
women
and
100
men
The
probability
that
a
person
randomly
picked
is
a
woman
is
200/300,
i.e.
2/3
Games
such
as
RouleGe,
Darts,
Die
rolling
etc
are
all
based
on
chance.
The
probability
that
a
person
hits
the
eye
of
the
dart
board
every
2me
in
20
throws
is
really
low
Out
of
a
set
of
2000
2res
manufactured
last
week,
the
2re
company
announced
that
there
were
15
defec2ve
2res
I
bought
a
2re
from
this
set,
what
is
the
probability
that
it
is
defec2ve?
2000 First
I
select
1
randomly
from
2000
2res,
I
have
c
ways
to
do
so,
this
will
be
the
size
1 of
my
Sample
Space
Event
that
I
have
one
defec2ve
2re
has
the
size
15
1
c The
probability
that
one
of
my
2res
is
defec2ve
is
15
c1 15
2000
c1
2000
= 0.0075
14
Thank you