EC255 Chapter Notes - Chapter 4: Weighted Arithmetic Mean, Noise Reduction, Bayes Estimator
Document Summary
Much statistical analysis is inferential, and probability is the basis for inferential statistics. Inferential statistics involves taking a sample from a population, computing a statistic on the sample, and inferring from the statistic the value of the corresponding parameter of the population. Since the value of the parameter is unknown, the analyst conducts the inferential process under uncertainty. By applying laws and rules, the analyst can often assign a probability of obtaining the results. Probabilities are used directly in certain industries and industry applications. E. g. the insurance industry uses probabilities in actuarial tables to determine the likelihood of certain outcomes in order to set specific rates and coverage. Gaming industry uses probability values to establish charges and payoffs. A way to determine whether a company"s hiring practices meet the gov. "s guidelines is to compare various proportional breakdowns of their employees to proportions in the general population from which the employees are hired.
