Probability in Every Day Life

1. Probability in Every Day Life By: Carla Norman, Erin Densmore, Dena E.

2. What is probability? • Probability is the measure of how likely an event is • Probability is found all around us.

3. Winning the lottery • If there is data for 100 days with similar weather conditions (the sample space), and on 70 of these days it rained (a favorable outcome), the probability of rain on the next similar day is 70/100 or 70% • A 50% probability means that an event is just as likely to happen as not to happen, a 70% chance means that it is more likely to rain than not

4. Insurance Premiums • Car insurance companies look at your age and driving record when deciding your premium rate. • If they see you've had several accidents, the likelihood is that you might have another one. In that case, your rates will be higher than a safe driver's.

5. Batting average • For baseball stats, all the percentages are multiplied by 10, so a 30% probability translates to a 300 batting average • Example: If your favorite baseball player is batting 300. This means that when he or she goes up to the plate, they only have a 30% chance of hitting the ball!

6. Batting Average • A batting average involves calculating the probability of a player hitting the ball. • The sample space is the total number of time a player has had at bat and each hit is a favorable outcome. Therefore, in 10 at-bats a player gets 3 hits, his or her batting average is 3/10 or 30%.

7. gambling • Counting Cards • Way for players to keep track of cards that have been dealt, giving them an idea about which cards are still left in the deck. • Blackjack is one of few casino games where card counting can be useful because probabilities change as cards are dealt and the player can see many of the cards that are dealt.

8. Games • Wheel of Fortune • Lets Make a Deal • Let it Roll • Who Wants to be a Millionaire • Texas Hold ‘Em • Poker

9. Environmental Regulation • Example: is the effect of the perceived probability of any widespread Middle East conflict on oil prices—which have ripple effects in the economy as a whole. • An assessment by a commodity trader that a war is more likely vs. less likely sends prices up or down, and signals other traders of that opinion • The probabilities are neither assessed independently nor necessarily very rationally

10. Consumer Products • Many consumer products, such as automobiles and consumer electronics, use reliability theory in product design to reduce the probability of failure • Failure probability may influence a manufacture's decisions on a product's warrantyand recall