Expected Value

Expected Value: The expected value of X is represented

by E(X)

E( X )   x p(x )
all x
i i
CHAPTER 3

SOME COMMON
PROBABILITY DISTRIBUTIONS
 SOME COMMON
PROBABILITY DISTRIBUTIONS
Types of Distributions
• Bernoulli Distribution
• Binomial Distribution
• Poisson Distribution
• Normal Distribution
• Uniform Distribution
• Exponential Distribution
Bernoulli Distribution
• The experiment consists of a single trial with two possible outcomes

• only two possible outcomes:

1 (success) 0 (failure) 
p(success)=p p(failure)=1-p
X = 1 if the outcome is success
= 0 if the outcome is failure
ÞX has a Bernoulli distribution.
The probability mass function is given by:
P(x) = px (1-p)1-x where x = 0; 1.

E(X) = p; V(X) = p(1-p)

Examples of Bernoulli distribution
• it’s going to rain tomorrow or not?
A rain denotes success and no rain denotes failure.
• How many boys are born each day?
- You want to find out how many boys are born each day, so
you call a boy birth a “success” and a girl birth a “failure.”
• The probability of a roll of two die resulting in a double
six. A double six die roll would be your “success” and
everything else rolled would be considered a “failure.”
Bernoulli Trial
• A Bernoulli trial is one of the simplest experiments you
can conduct in probability and statistics. It’s an
experiment where you can have one of two possible
outcomes. For example, “Yes” and “No” or “Heads” and
“Tails.” 
• Bernoulli trials are usually phrased in terms
of success and failure. Success doesn’t mean success in
the usual way — it just refers to an outcome you want to
keep track of. 
Independence
• Each trial must be independent: the outcome of one trial does not
affect the outcomes of any other trials.

• A series of Bernoulli trials:

- Each trial is independent.
- Each trial has only two possible outcomes:
1 (success) and 0 (failure) 
p(success)=p p(failure)=1-p
Binomial Distribution
• Binomial Experiment
- Each trial is independent.
- There are only two possible outcomes in a trial- either a
success or a failure.
- Total number of trials: n
- The probability of success and failure is same for all trials.
(Trials are identical).
Binomial Random Variable
• The binomial random variable is the number of successes in the
Binominal experiment’s n trials.
It can take on values 0, 1, 2, . . . , n.

Thus, the random variable is discrete.

 Binomial Probability
Distribution
• The probability of x successes in a binomial
experiment with n trials and probability of success
= p is

n
p ( x)   p x (1  p ) n x=0,1,2,…,n.
for x

x ! (n  x)!
Example
Pat Statsdud is a student taking a statistics course.
Unfortunately, Pat is not a good student. Pat does not read
the textbook before class, does not do homework, and
regularly misses class. Pat intends to rely on luck to pass the
next quiz. The quiz consists of 10 multiple-choice questions.
Each question has five possible answers, only one of which is
correct. Pat plans to guess the answer to each question.
a. What is the probability that Pat gets no answers correct?
b. What is the probability that Pat gets two answers correct?
Example
• The experiment is binomial with n =10 and p = 0.2
Let X be the number of correct answers in n trials.
a) P(X=0) =?
b) P(X=2) = ?

P(X  4) = ?
Excel
• Type the following into any empty cell:

=BINOMDIST([x], [n], [p], [True] or [False])

Typing “True” calculates a cumulative probability and

typing “False” computes the probability of an individual
value of X.
Poisson distribution
• The number of cars arriving at a service station in 1 hour.
(The interval of time is 1 hour.)

• The number of flaws in a bolt of cloth.

(The specific region is a bolt of cloth.)

• The number of accidents in 1 day on a particular stretch of

highway. (The interval is defined by both time, 1 day, and
space, the particular stretch of highway.)
Poisson Experiment
1. The number of successes that occur in any interval is
independent of the number of successes that occur in any
other interval.
2. The probability of a success in an interval is the same for
all equal-size intervals.
3. The probability of a success in an interval is proportional to
the size of the interval.
4. The probability of more than one success in an interval
approaches 0 as the interval becomes smaller.
Poisson Random Variable
• The Poisson random variable is the number of successes
that occur in a period of time or an interval of space in a
Poisson experiment.

e  x
p( x)  for x = 0; 1; 2; …
x!
 is the mean number of successes in the interval or region
and e is the base of the natural logarithm (approximately
2.71828). Incidentally, the variance of a Poisson random
variable is equal to its mean;
Example
• A statistics instructor has observed that the number of
typographical errors in new editions of textbooks varies
considerably from book to book. After some analysis, he concludes
that the number of errors is Poisson distributed with a mean of 1.5
per 100 pages. The instructor randomly selects 100 pages of a new
book. What is the probability that there are no typographical
errors?
• Suppose that the instructor has just received a copy of a new
statistics book. He notices that there are 400 pages.
a. What is the probability that there are no typos?
b. What is the probability that there are five or fewer typos?
 Example 1: expected value

 E(X) = ?
x 10 11 12 13 14

P(x) .4 .2 .2 .1 .1

 x p( x)  10(.4)  11(.2)  12(.2)  13(.1)  14(.1)  11.3

i 1
i
Example 2
• The test score of 2000 students in statistics:
xi 5 6 7 8 9 10
ni 100 500 700 300 150 250
Find the mean for the population X?
6
E ( X )   xi p ( xi )  ?
i 1

100 500 700

 5  6  7 
2000 2000 2000
300 150 250
 8  9  10   7.325
2000 2000 2000
Note

n
E ( X )   xi p ( xi )  ?
i 1

• The expected value of X approximates the average (the arithmetic

mean, the sum of the numbers divided by how many numbers are
being averaged).
Variance/standard deviation
  V ( X )  E ( X )   E ( X )
2 2 2
• ???

• Muy= E(X)
• V(X)= E(X-E(X))2>=0

• Shortcut Calculation for Population Variance

• Population Standard Deviation   2

Example 3
• Find the mean, variance, and standard deviation for the population X

X
Continuous Probability Distributions

* PROBABILITY DENSITY FUNCTIONS

f ( x)  F '( x)
(Continuous random variable)

* Requirements for a Probability Density Function

1. f(x)  0 for all x between a and b, a,b in R

2. The total area under the curve
between a and b is 1.0.
Continuous Probability Distributions

f(x)  0,  x in R (F(x) is not decreasing )





f ( x ) dx  1
f(x)
b
p (a  X  b)   f ( x) dx a b
a
f(x)

a
F (a)  

f ( x ) dx f(x)

O a x
Continuous Probability Distributions

Expected Value: The expected value of X is represented

by E(X)


E( X )   x. f ( x)dx

Variance/standard deviation

  V ( X )  E[( x  ) ]   ( x  )
2 2 2
f ( x)dx


• Shortcut Calculation for Population Variance

  V (X )  E  X
2 2
  2

• Population Standard Deviation   2

Laws of Expected Value
and Variance
• Laws of expected value
1. E(c) = c * E(X+Y) = E(X) + E(Y)
2. E(X + c) = E(X) + c
3. E(c.X) = c. E(X) * V(X+Y) = V(X) + V(Y)
• Laws of Variance if X and Y are independent
1. V(c) = 0
2. V(X + c) = V(X)
3. V(c X) = c2V(X)
Example 4
• The monthly sales at a computer store have a mean of $25,000 and a
standard deviation of $4,000. Profits are calculated by multiplying
sales by 30% and subtracting fixed costs of $6,000. Find the mean and
standard deviation of monthly profits.