ADM 2303 Chapter Notes - Chapter 2: Prior Probability, Posterior Probability, Bayes Estimator
23 Sep 2016
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Document Summary
Probability refers to the chance that a particular event will occur. Theoretical assessment: number of possibilities: subjective probability assessment. Refers to the method that defines probability of an event as reflecting a decision maker"s state of mind regarding the chances that the particular event will occur. Logically quite simple: but somehow we don"t process them very well, (that"s why we need empirical and theoretical probability) Two events are independent if the outcome of one trial does not influence or change the outcome of the next trial. Example: roll a die or flip a coin several times. Two events are dependent if the probability of one event occurring influences the likelihood of the other event. Example: draw two cards from a deck of 52 cards, put each aside. If the events are independent, the long-run relative frequency of an event gets closer and closer to a single value. I roll a single die 100 times (independent trials).
