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What is probability?

The term probability is used to define the mathematical calculation that establishes all the possibilities that exist for a phenomenon to occur in certain random circumstances. Probability is calculated based on a value between 0 and 1, and the level of certainty is determined by the closeness to the unit value; on the other hand, if it is closer to zero, there is less certainty in the final result.

What is the formula for calculating probability?

To calculate probability, you must divide the number of favorable events by the total number of possible events. This generates a sample, and the calculation can be performed from the data obtained.

Calculating probabilities is expressed as a percent and follows the formula:

Probability = Favorable cases / possible cases x 100.

What types of probability are there?

  • Mathematical: this follows the principles of formal, non-experimental logic, calculating random events that may occur within a certain field in figures.
  • Frequency: based on experimentation and determines the number of times an event may occur by considering a specific number of opportunities.
  • Objective: considers the frequency of the event in advance and only sheds light on the probable cases when that event may occur.
  • Subjective: this concept is the opposite of mathematical probability, as it takes certain eventualities into account that allow inferring the probability of a certain event, even without having certainty at the arithmetic level. 
  • Binomial: determines the success or failure of an event with only two possible outcomes.
  • Logical: raises the possibility of an event occurring based on inductive laws.
  • Conditional: explains the probability of one event happening based on the prior occurrence of another, so one is dependent on the other. 
  • Hypergeometric: probability obtained from sampling techniques – that is, events are classified according to the frequency of their occurrence. This way, a set of groups of events are created that are determined according to their occurrence. 

What theories explain probability?

There are three methods for determining the probability of any event, and they are based on the rules of:

  1. Addition: states that the probability of a particular event occurring is equal to the sum of the individual probabilities, as long as the events do not occur at the same time.
  2. Multiplication: posits that the probability of two or more independent events occurring is equal to the product of their individual probabilities.
  3. Binomial distribution: posits that the probability of a given combination of events occurring independently of each other admits only two possible mutually exclusive outcomes: success or failure.

There is also Laplace’s rule, which states that, in a random sample composed of results that are equally probable, the probability of an event is the result of the number of possible cases divided by the number of probable cases.

In what situations can probability be used?

Some examples where probability is applied are:

  1. Statistical analysis of business risk: drops in stock prices, investment statements, etc. can be estimated through probabilistic formulas. 
  2. Insurance calculation: the processes used to study the reliability of an insured party, making it possible to know whether it is profitable to insure them and at what price and time span this should be done, arise from probability calculations and strategies. 
  3. Behavioral analysis: in this type of application, probability is used to evaluate certain behaviors of a population sample so that certain patterns of opinions, behaviors, or thoughts can be predicted.
  4. Medical research: the success of vaccines, as well as their side effects in a population, is an example that’s determined by probabilistic calculations.

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