Conditional Probability

Independent Events
According to USA Today, 65% of Americans are overweight or
obese. If five Americans are chosen at random, what is the
probability that at least one of them is overweight or obese?

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 Conditional Probability

Interesting Paradoxes
Monty Hall problem
(http://www.mathwarehouse.com/monty-hall-simulation-online/)

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 Conditional Probability

Interesting Paradoxes
Monty Hall problem
(http://www.mathwarehouse.com/monty-hall-simulation-online/)

Prof. Pritam Ranjan IPS (July 7, 2017) 11/29

 Conditional Probability

Interesting Paradoxes
Three prisoners’ problem

Bertrand’s box paradox

Unexpected hanging paradox

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 Conditional Probability

Joint probability table

Questionnaire example: The question, ”Do you smoke?” was asked

to 100 people. Results are shown in the table.

Yes No
Male 19 41
Female 12 28
Total

(a) What is the probability that a randomly selected individual is a

male who smokes?
(a) What is the probability that a randomly selected male is a smoker?

(b) What is the probability that a randomly selected smoker is male?

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 Conditional Probability

Joint probability table

(Ex 8.47) The following table gives the percentages of men and women 20 years
and older employed in various occupations (U.S. Survey). There are about
70-million men and 70-million women in the workforce.
Men Women
Management 35 42
Service 14 20
Sales 17 32
Mining 17 1
Production 17 5
Total 100% 100%

(a) What does the number 14 in the table represent?

(b) If you pick a person at random from the sales, what is probability you picked a
woman?
(c) If you know someone’s occupation, can you guess whether they are male or
female? which occupation makes this guess easiest?
(d) What is the probability of picking someone at random from the service
industry?

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 Conditional Probability

Joint probability table

Let A and B be two factors, and A1 , ..., Am and B1 , ..., Bn denote a
partition (i.e., all possible values of A and B).
A1 A2 ··· Am
B1
B2
..
.
Bn

General rule:

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 Conditional Probability

Marketing example
There are three major manufacturing companies that make a
product: Dell, HP and Lenovo. Dell has a 50% market share, and
HP has a 30% market share. 5% of Dell’s product is defective, 7%
of HP’s is defective, and 10% of Lenovo’s product is defective.
(a) Construct the joint probability table.
(b) Check whether ”product is defective” and ”product came from
Dell” are independent?

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 Conditional Probability

Bayes’ Theorem/Rule
Typically, we talk about
P(1st − stage event) or P(2nd − stage event|1st − stage event),

e.g., Draw two balls one at-a-time without replacement from an urn
containing 4 red and 6 green balls. Find the probability of
(a) getting a red ball in the first draw.
(b) getting a red ball in the second draw given 1st is red.

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 Conditional Probability

Bayes’ Theorem/Rule
Typically, we talk about
P(1st − stage event) or P(2nd − stage event|1st − stage event),

Assume: We don’t know what happened in the past, but we know the
present. Can we guess what happened in the past?

Objective: to find inverse probability: (assumption: know the outcome

of 2nd stage event, but don’t know the outcome of the 1st stage event)
P(1st − stage event|2nd − stage event)
Stage-1: observe the color of the 1st ball,
Stage-2: observe the color of the 2nd ball.
Objective: find P( 1st ball was red | 2nd ball is red)

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 Conditional Probability

Bayes’ Theorem/Rule
NOT motivating enough !!
e.g., [businessinsider.com] Suppose you are living with a partner and
come home from a business trip to discover a strange pair of
under**** in your dresser.

What is the probability that your partner is cheating on you?

Stage-1: partner cheated,

Stage-2: found a strange under****.
Objective: find P(partner cheated | found a strange under****)

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 Conditional Probability

Bayes’ Theorem/Rule
Stage-1 event: B, Stage-2 event: A

Simple case

P(A|B)P(B) P(A|B)P(B)
P(B|A) = =
P(A) P(A|B)P(B) + P(A|B � )P(B � )

More complex version:

P(Ai |Bj )P(Bj )

P(Bj |Ai ) = �
k P(Ai |Bk )P(Bk )

Foundation of Bayesian Statistics

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 Conditional Probability

URN model

1. Draw two balls one at-a-time without replacement from an urn

containing 4 red, 6 green and 13 black balls. Find the probability of
(a) getting a red ball in the first draw given you observed a
red ball in the second draw.
(b) getting a non-red ball in the first draw given you
observed a red ball in the second draw.

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 Conditional Probability

Marketing application
(Ex 8.40) Some of the managers at a company have an MBA
degree. Of managers at the level of director or higher, 60% have an
MBA. Among other managers of lower rank, 35% have an MBA.
For this company, 15% of managers have a position at the level of
director or higher. If you meet an MBA from this firm, what are the
chances that this person is a director (or higher)?

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 Conditional Probability

Drug testing application

An HIV test gives a positive result with probability 98% when the
patient is indeed affected by HIV, while it gives a negative result
with 99% probability when the patient is not affected by HIV. If a
patient is drawn at random from a population in which 0.1% of
individuals are affected by HIV and he is found positive, what is the
probability that he is indeed affected by HIV?

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 Conditional Probability

Quality control
There are three major manufacturing companies that make a
product: Dell, HP and Lenovo. Dell has a 50% market share, and
HP has a 30% market share. 5% of Dell’s product is defective, 7%
of HP’s is defective, and 10% of Lenovo’s product is defective.
(a) If a product is found defective, what is the probability that it
came from Dell?

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 Conditional Probability

Quality control
Consider a firm that manufactures integrated circuits (chips).
Based on extensive (and expensive) testing of a sample of 1000
chips, it finds that the defect rate s 10%. It found that the
inspector typically had a 5% error rate on both defective and
non-defective chips. Find the probability a randomly chosen chip is
defective in the lot that has passed the inspection.

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 Conditional Probability

Real Estate business

A realtor is trying to sell a large piece of property. She believes
there is a 0.90 probability that the property will be sold in the next
6 months if the local economy continues to improve throughout the
period, and a 0.50 probability the property will be sold if the local
economy does not continue its improvement during the period. A
state economist consulted by the realtor believes there is a 0.70
chance the economy will continue its improvement during the next
6 months. What is the probability that the piece of property will be
sold during the period?

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 Conditional Probability

Stock market
Two stocks A and B are known to be related in that both are in the
same industry. The probability that stock A will go up in price
tomorrow is 0.20, and the probability that both stocks A and B will
go up tomorrow is 0.12. Suppose that tomorrow you find that stock
A did go up in price. What is the probability that stock B went up
as well?

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 Conditional Probability

CASE: Job application

A business graduate wants to get a job in any one of the top 10
accounting firms. Applying to any of these firms requires a lot of effort
and paperwork and is therefore costly. She estimates the cost of applying
to each of the 10 firms and the probability of getting a job offer there.
Firm 1 2 3 4 5 6 7 8 9 10
Cost 870 600 540 500 400 320 300 230 200 170
Prob 0.38 0.35 0.28 0.20 0.18 0.18 0.17 0.14 0.14 0.08

1 If the graduate applies to all 10 companies, what is the probability

that she will get at least one offer?
2 If she can apply to only one firm, based on cost and success
probability criteria alone, should she apply to firm 5? Why?
3 If she applies to companies 2, 5, 8, and 9, what is the total cost?
What is the probability that she will get at least one offer?

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 Conditional Probability

Homework

Practice questions:
Chapter 8

Next topic: (discrete) Random Variables

Finish unsolved examples from today’s lecture

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