ECO220Y1 Chapter Notes - Chapter 8: Empirical Probability, Serial Position Effect, Sample Space
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ECO220Y1 Full Course Notes
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Random phenomena: know what outcomes could happen but not which particular values will happen. Can try to understand characteristics of long term behaviour. Sample space: collection of all possible outcome values. Sample space for outcome of two trials and event a (at least one y) Empirical probability: comes from long-run relative frequency of event"s occurrence. Law of large numbers (lln):long-run relative frequency of repeated, independent events settles down to true relative frequency as number of trials increase. People believe an outcome that hasn"t occurred in many trials is due to occur. Relative frequencies even out only in long run. Sequences of random events don"t compensate in short-run. Probability is number of outcomes divided by total number of possible outcomes. Probability that is subjective and represents personal degree of belief. Risk of overconfidence bias, sunk cost bias, recency bias, self-confirmation bias (surrounding oneself with others who share same views) For any event a, 0 <= p(a) <= 1 a. b. c.
