2023 August 13

BM6040 Managerial Decision Analysis

Probability Theory
(Introduction to probability, Basic probability rules, Joint and marginal probabilities,
Conditional probability)

By
Prof. Ruwan Jayathilaka
B.A, MEcon (Colombo), MSc (NUS), PhD (Griffith)

Google Scholar: https://scholar.google.com/citations?user=OggscHUAAAAJ&hl=en

Research Gate: https://www.researchgate.net/profile/Ruwan_Jayathilaka
SLIIT : https://www.sliit.lk/faculty-of-business/staff/ruwan.j/
Email : [email protected]

13th August 2023

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Objectives
• Explain the importance of probability theory to statistical inference
• Define the terms random experiment, sample space, elementary
event, event, union of events, intersection of events, complement of
an event and mutually exclusive events
• Explain the different approaches to assigning probabilities to events
define the terms joint, marginal and conditional probabilities and
independent events
• Calculate probabilities using the basic probability rules - complement
rule, addition rule and multiplicative rule of probabilities
• Understand the use of probability trees in calculating complicated
probabilities
• Understand Bayes‘ law as an alternative way of calculating
conditional probabilities.

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Thinking Challenge
• What’s the probability
of getting a head on
the toss of a single fair
coin? Use a scale from
0 (no way) to 1 (sure
thing).
• So toss a coin twice.
Do it! Did you get one
head & one tail?
What’s it all mean?

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Many Repetitions!*
Total Heads
Number of Tosses
1.00

0.75

0.50

0.25

0.00
0 25 50 75 100 125
Number of Tosses

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Introduction
•Probability theory is an integral part of all statistics,
and in particular it is essential to the theory of
statistical inference.
•Statistical inference provides the decision maker -
perhaps a business person or an economist - with a
body of methods that aid in decision-making in
situations of uncertainty.
•Probability theory can be used to measure the
degree of uncertainty.

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Assigning Probabilities to Events

• Random experiment : A random experiment is a process that results
in one of a number of possible outcomes, which cannot be predicted
with certainty. (…. process or course of action whose outcome is
uncertain).
• Examples

Experiment Possible Outcomes

1. Flip a coin Head, tail
2. Roll a die 1,2,3,4,5,6
3. Record marks on a statistics
Numbers between 0 and 100
test (out of 100)
4. Measure the time to
Numbers from zero to above
assemble a computer
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Assigning Probabilities to Events

• Performing the same random experiment repeatedly may
result in different outcomes, therefore the best we can do
is consider the probability of occurrence of a certain
outcome.
• To determine the probabilities, we need to define and list
the possible outcomes first.

• Probability: A numerical measure that indicates the

likelihood (or chance) of a specific outcome in a random
experiment

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Sample Space - S
• Determine the outcomes
–Build an exhaustive list of all possible outcomes.
–Make sure the listed outcomes are mutually exclusive.
• A list of outcomes {O1, O2,……. On} that meets the two conditions
above is called a sample space.
S={O1, O2,……. On}
• Example: Experimental 1, sample space would be
S = {head, tail}
Experimental 2, sample space would be
S = {1,2,3,4,5,6}
• The individual outcomes in a sample space are also called simple
event or elementary events.

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Probability of an outcome
• The probability of an outcome is simply the chance that an outcome
Oi will occur, denoted by
P(Oi), where i = 1, 2 ,….n.

Requirements of probabilities
• Given a sample space of S={O1, O2,……. On}, the probabilities assigned
to the outcome Oi must satisfy two basic requirements:
(1) The probability of an outcome must lie between 0 and 1.
0 ≤ P (Oi) ≤ 1 for each i, i = 1, 2,…., n
(2) The sum of the probabilities of all possible outcome in a sample
space must be equal to 1. n

P(O1)+ P(O2)+……..+ P(On)=1 or  P(Oi ) = 1

i =1
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Approaches to Assigning Probabilities…

There are three ways to assign a probability, P(Oi), to an
outcome, Oi, namely:
• Classical approach: based on equally likely events.
• Relative frequency: assigning probabilities based on
experimentation or historical data.
• Subjective approach: Assigning probabilities based on the
assignor’s (subjective) judgment.

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Classical Approach
• is used by mathematicians to help determine the probability
logically for outcomes associated with games of chance.
• If an experiment has n possible outcomes, this method would
assign a probability of 1/n to each outcome. It is necessary to
determine the number of possible outcomes.

Experiment: Rolling a die

Outcomes {1, 2, 3, 4, 5, 6}
Probabilities: Each sample point has a 1/6 chance of occurring.

Note that 0 ≤ P(each outcome) ≤ 1 and the sum of all probabilities is 1.

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Classical Approach
Experiment: Rolling two dice and observing the total
outcomes: {2, 3, …, 12}
Examples:

P(2)=1/36 1 2 3 4 5 6
1 2 3 4 5 6 7
2 3 4 5 6 7 8
3 4 5 6 7 8 9
P(6)=5/36
4 5 6 7 8 9 10
5 6 7 8 9 10 11
6 7 8 9 10 11 12
P(10)=3/36

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Relative Frequency Approach

• expresses an outcome’s probability as the long-run relative
frequency with which the outcome occurs.
• Example: A and B Computer shop tracks the number of desktop
computer system it sells over a month (30 days).

Desktop Sold # of Days

For example,
10 days out of 30 0 1
2 desktops were sold. 1 2
2 10
3 12
From this we can construct the 5 5
probabilities of an event
(i.e. the # of desktop sold on a given day)…
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Relative Frequency Approach

Desktop Sold # of Days Desktop Sold
0 1 1/30=0.03
1 2 2/30=0.07
2 10 10/30=0.33
3 12 12/30=0.40
5 5 5/30=0.17
=30 =1.00

‘There is a 40% chance A & B will sell 3 desktops on any given day’.

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Subjective Approach
• ‘In the subjective approach we define probability as the degree of belief
that we hold in the occurrence of an event.’
E.g. weather forecasting’s ‘P.O.P.’
• ‘Probability of Precipitation’ (or P .O.P .) is defined in different ways by
different forecasters, but basically it’s a subjective probability based on past
observations combined with current weather conditions.
• POP 60% – based on current conditions, there is a 60% chance of rain (say).
E.g.
• What is the likelihood of a recession next year?
• The outcomes could be either a recession next year or no recession next
year. But there is no reason to believe that these two outcomes are equally
likely (the equally likely approach not possible).
• This experiment cannot be replicated to use the relative frequency
approach.
• In this situation we can only use our 'subjective judgment' to assign a
probability to the above event
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Event
• An event is any collection of one or more possible outcomes from
an experiment. Events are denote by capital letters. For example, in
the tossing a die experiment the event ‘an even number is
observed’ can be described as A={2, 4, 6}, where { } is read ‘the set
of consisting of’

Probability of an Event
• The probability of an event E, denote by P(E), is equal to the sum of
the probabilities assigned to the outcomes contained in E.
𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑜𝑢𝑡𝑐𝑜𝑚𝑒𝑠 𝑖𝑛 𝐸
P(E) = 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑜𝑢𝑡𝑐𝑜𝑚𝑒𝑠 𝑖𝑛 𝑆
• For example, in the tossing a die experiment, the probability of the
event E={an even number is observed} is
1 1 1 1
P(E)=P{2,4,6}=P(2) + P(4) + P(6) = 6 + 6 + 6 = 2
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Venn diagram
• A useful geometrical representation of a sample space S, called a
Venn diagram, is presented in following figure. In a Venn diagram,
the entire sample space S is represented by a rectangle; points
inside the rectangle represent the individual outcomes in S. An
event A in the sample space S is represented by a circle, and points
inside the circle represent the individual outcomes in event A.

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Venn diagram
• Now, let’s look at how to combine events to form new
ones. In arithmetic, new numbers can be created from
existing ones by means of operations such as addition and
multiplication. Similarly, in probability, new events can be
created from events already defined by means of
operations called complement of events, intersection of
events, union of events, mutually exclusive events,
dependent events and independent events.

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Probability of Combinations of Events

• If A and B are two events, then
P(A  B) = P(A occur or B occur or both)
P(A  B) = P(A and B both occur)
P(Ā) = P(A does not occur)
P(A|B) = P(A occurs given that B has occurred)

The union of A and B

The intersection of A and B
The complement event of A
The conditional probability of A given B

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Complement of an Event
• The complement of event A is defined to be the event consisting of
all sample points that are ‘not in A’.
• Complement of A is denoted by Ac, 𝐴ҧ , A’
• The Venn diagram below illustrates the concept of a complement.
• P(A) + P(Ac) = 1

A Ac

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Complement of an Event
• For example, the rectangle stores all the possible tosses of 2 dice
{(1,1), (1,2),… (6,6)}
• Let A = tosses totalling 7
= {(1,6), (2, 5), (3,4), (4,3), (5,2), (6,1)}
• P(Total = 7) + P(Total not equal to 7) = 1

A Ac

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Intersection of Two Events

• The intersection of events A and B is the set of all sample points
that are in both A and B.
• The intersection is denoted: A and B.
• The joint probability of
• A and B is the probability of A and B, is the probability of the
intersection of A and B,
i.e. P(A and B).

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Intersection of Two Events

• For example, let A = tosses where first toss is 1 = {(1,1), (1,2), (1,3),
(1,4), (1,5), (1,6)}
• and B = tosses where the second toss is 5 = {(1,5), (2,5), (3,5), (4,5),
(5,5), (6,5)}
• The intersection is {(1,5)}

• The joint probability of A

and B is the probability of
the intersection of A and B,
i.e. P(A and B) = 1/36

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Union of Two Events

• The union of two events A and B, is the event containing all sample
points that are in A or B or both:
• Union of A and B is denoted: A or B
• For example, let A = tosses where first toss is 1 {(1,1), (1,2), (1,3),
(1,4), (1,5), (1,6)} and B is the tosses that the second toss is 5 {(1,5),
(2,5), (3,5), (4,5), (5,5), (6,5)}
• Union of A and B is {(1,1),
(1,2), (1,3), (1,4), (1,5), (1,6),
(2,5), (3,5), (4,5), (5,5), (6,5)}

• The probability of A  B,
P(A  B) = 11/36

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Mutually Exclusive Events

• When two events are mutually exclusive (that is the two events
cannot occur together), their joint probability is 0, hence:

A B • A and B are mutually

exclusive; no points in
common…

For example,
A = tosses totalling 9 = {(3,6), (6,3), (4,5), (5,4)}
and B = tosses totalling 11 = {(5,6), (6,5)}
Therefore, A  B = { } = Empty set. P(A  B) = 0
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Example 1
• The number of spots turning up when a six-sided die is tossed is
observed. Consider the following events:
A: The number observed is an even number.
B: The number observed is greater than 4.
C: The number observed is less than 4.
D: The number observed is 4.
a) Define a sample space for this random experiment, and assign
probabilities to the outcomes.
b) Find P(A), P(B), P(C) and P(D).
ҧ
c) Find P(𝐴).
d) Find P(A  B).
e) Find P(A  B).
f) Are events B and C mutually exclusive?
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Example 1 - Solution
a)The Sample Space is S= {1, 2, 3, 4, 5, 6}. Since each of the six possible
outcomes is equally likely to occur:
P(1)= P(2)= P(3)= P(4)= P(6)= 1/6
b) The events A, B, C and D are as follows: A = {2, 4, 6}, B= {5, 6},
C = {1, 2, 3}, D = {4}. Since the probability of an event E is equal to the
sum of the probabilities assigned to the outcomes contained in E,
P(A)= P(2) + P(4)= P(6)= 1/6 + 1/6 + 1/6 = 0.5
Similarly,
P(B)= P(5) + P(6)= 1/6 + 1/6 = 1/3 = 0.333
P(C)= P(1) + P(2) + P(3)= 1/6 + 1/6 + 1/6 = 1/2 = 0.5
P(D)= P(3)= 1/6 = 0.167
c) The three outcomes in A are represented in Figure by the points
lying outside the region describing event A.
The complement of event A is 𝐴ҧ ={1, 3, 5}. Therefore,
P(𝐴ҧ ) : P(1) + P(3) + P(5) = 3/6 = 0.5
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Example 1 - Solution
d) The intersection of the two events A and B is (A  B) = {6}.
Therefore,
P(A  B) = P(6) = 1/6= 0.167
e) The union of the two events A and B is (A  B) = {2, 4, 5, 6}.
Therefore,
P ( A  B ) = P(2) + P(4) + P(5) + P(6) = 4/6 = 0.67
f) Two events B and C are mutually exclusive if the occurrence of one
precludes the occurrence of the other — that is, if the event
(B  C) is an empty set (i.e. it has no possible outcomes).
The events B = {5, 6} and C = {1, 2, 3} defined in this example are
mutually exclusive because B and C have no outcomes in common.
The event (B  C) = { } is an empty set.

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Example 2
• A & B Pty Ltd manufactures window air-conditioners in both a
deluxe model and a standard model. An auditor undertaking a
compliance audit of the firm is validating the sales account for
April. She has collected 200 invoices for the month, some of which
were sent to wholesalers and the remainder to retailers. Of the
140 retail invoices, 28 are for the standard model. Of the
wholesale invoices, 24 are for the standard model. If the auditor
selects one invoice at random, find the probability that:
a) the invoice selected is for the deluxe model .
b) the invoice selected is wholesale invoice for the deluxe model
c) the invoice selected is either a wholesale invoice or an invoice
for the standard model.

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Example 2 - Solution
• The sample space S here consists of the 200 invoices. Whenever
the outcomes can be classified according to two relevant
characteristics - in this case, according to the model sold and type
of purchaser - it is worthwhile displaying the pertinent
information in a cross-classification table, below. The numbers
given in this example have been circled in the Table; you should
check to confirm that you can fill in the remaining numbers
yourself from the given information.
Model Wholesale (W) ഥ
Retail (𝑊) Total
Delux (D) 36 112 148
ഥ)
Standard (𝐷 24 28 52
Total 60 140 200

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Example 2 - Solution
The events of interest are as follows:
W : wholesale invoice is selected
𝑊ഥ : retail invoice is selected
D : invoice for deluxe model is selected
𝐷ഥ : invoice for standard model is selected

a) Since there are 200 invoices in total, the number of possible

outcomes in the sample space S is 200. Since there are 148
invoices for the deluxe model, event D contains 148 outcomes.
Therefore, we find that the probability that the invoice selected
was for the deluxe model is

𝑛𝑢𝑚𝑏𝑒𝑟𝑜𝑓 𝑜𝑢𝑡𝑐𝑜𝑚𝑒𝑠 𝑖𝑛 𝐷 148

𝑃 𝐷 = = = 0.74
𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑜𝑢𝑡𝑐𝑜𝑚𝑒𝑠𝑖𝑛 𝑆 200
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Example 2 - Solution
b) Since there are 36 wholesale invoices for the deluxe model, the
event (D  W) contains 36 outcomes. Hence, the probability that
the invoice selected was a wholesale invoice for the deluxe
model is
36
𝑃 𝐷∩𝑊 = = 0.18
200

c) The number of invoices that are either wholesale invoices (W) or

invoices for the standard model (𝐷ഥ ) is 60 + 52 - 24 = 83 (use a
Venn diagram to see this.) Thus, the event (W  𝐷 ഥ ) contains 88
outcomes. Therefore,
88
𝑃 𝑊∪𝐷 ഥ = = 0.44
200

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Conditional probabilities ?
• Conditional probability is used to determine how two events are
related; that is, we can determine the probability of one event
given the occurrence of another related event.
• Again, the probability of an event given that another event has
occurred is called a conditional probability
• Conditional probabilities are written as P(A|B) and read as
‘the probability of event A given that event B has occurred’, and is
calculated as:
𝑃(𝐴 𝑎𝑛𝑑 𝐵) 𝑃(𝐴 ∩ 𝐵)
𝑃 𝐴𝐵 = =
𝑃(𝐵) 𝑃(𝐵)
for P(B) > 0 and undefined otherwise
Similarly,
𝑃(𝐴 ∩ 𝐵)
𝑃 𝐵𝐴 =
𝑃(𝐴)
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Independent and Dependent Events

• When two events happen, the outcome of the first event may or
may not have an effect on the outcome of the second event.
Independent Events Dependent
• Marginal • Marginal
• Joint • Joint
• Conditional • Conditional

Marginal Probabilities under Statistical

Independence
• In a fair coin toss, P(H)=P(T)=0.5. This is true for every toss. No
matter how many tosses have been made. Every toss stands
alone and is in no way connected with any other. The outcome
of several tosses of this coin are statistically independent
events too, even though the coin is biased.
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Joint Probabilities under Statistical

Independence
• Probability of heads on two successive tosses is the probability of
heads on the first toss times the probability of heads on the
second toss. P(HH)=0.5X0.5=0.25

• Thus, joint probability of two independent events

P(AB)=P(A) X P(B)

where
P(AB) = probability of events A and B occurring together or in
succession; This is known as a joint probability
P(A) = marginal probability of event A occurring
P(B) = marginal probability of event B occurring

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Conditional Probabilities under

Statistical Independence
• For statistically independent events, the conditional probability of
event B given that event A has occurred is simply the probability
of event B.
• P (B|A) = P(B)
Conditional Probabilities under
Statistical Dependence
Example 2 : Suppose that we are told that the invoice selected by
the auditor is a wholesale invoice (W). We may then determine the
probability that this invoice if for the dulux model (D)

𝑃(𝐷 ∩ 𝑊 ) 36
𝑃 𝐷𝑊 = = = 0.6
𝑃(𝑊) 24 + 36

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Joint Probabilities and marginal Probabilities

under Statistical Dependence
Model Wholesale (W) ഥ
Retail (𝑊) Total
Delux (D) 0.18 0.56 0.74
ഥ)
Standard (𝐷 0.12 0.14 0.26
Total 0.30 0.70 1.00
Joint probabilities Marginal
probabilities of
Marginal probabilities of sales types model types
• Joint probabilities : Express the likelihood of occurrence of joint
events. 0.18 is the probability that the joint event (DW) will occur
• The two sets of probabilities (0.30, 0.70) and (0.74, 0.26) that
appear at the margins of the table are called marginal
probabilities.
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Rules of probability
• Complement rule
Sum of the probability assigned to each possible outcome in a
sample space must equal one. Give any event A and its
complement 𝐴,ҧ each outcome in the sample space must
belong to either A or 𝐴.ҧ Thus, For any event A,
P(𝐴)ҧ = 1 − P(A)

• Addition rule
Probability of the union of two events from the probability of
other events. For any two events A and B,
P(AB) = P(A) + P(B) - P(AB)
if the A and B are mutually exclusive, P(AB) =0, Then addition
rule simplifies to
P(AB) = P(A) + P(B)
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Rules of probability
• Multiplication rule
Used to find the probability of a joint event. Simply
arrangement of the definition of conditional probability.
• Multiplication rule for dependent events
P(AB) = P(B|A).P(A) or
P(AB) = P(A|B).P(B)
• Multiplication rule for independent events
P(AB) = P(A).P(B)

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Probability trees
• Various possible events of an experiment are represented by
lines or branches of the tree.

Example 3
The manager of a men’s clothing store has recorded the buying
behaviour of customers over a long period of time. He has
established that the probability that a customer will buy a shirt is
about 0.4. A customer buys a tie 50% of the time when a shirt is
purchased, but only 10% of the time when a shirt is not purchased.
Find the probability that a customer will buy the following:
a) a shirt and a tie
b) a tie
c) a shirt or a tie
d) a tie but not a shirt
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Example 3 - Solution
The random experiment consists of observing, for each customer,
whether a shirt is purchased and whether a tie is purchased. The two
basic events of interest are therefore:

R: A customer buys a shirt.

T: A customer buys a tie.

Summarising the given information, we have P(R) = 0.4, P(T|R) = 0.5

and P(𝑇|𝑅)ത = 0.1. Before constructing a probability tree, we should
search the given probabilities for an unconditional probability. In this
example, we are given the unconditional probability that event R will
occur, so event R will be considered at the first stage and event T at
the second. We can now construct the probability tree for this
experiment
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Example 3 - Solution
Stage 1 Stage 2 Possible outcomes joint Probabilities
T (RT) P(RT)=0.20
R

ത
(R𝑇) ത
P(R𝑇)=0.20
𝑇ത

T ത
(𝑅T) ത
P(𝑅T)=0.06

𝑅ത ത 𝑇)
(𝑅 ത ത 𝑇)=0.54
ത
P(𝑅
𝑇ത
Calculating the outcomes at the end of the tree, we find that a sample space
for the experiment is
S = { (R  𝑇),
ത (R  ഥ𝑇 ), (𝑅ത  T), (𝑅ത  𝑇)
ത }
Calculating the required probabilities is now quite simple, amounting to little
more than reading off the joint (outcome) probabilities from tree.
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Example 3 - Solution
a) The probability that a customer will buy a shirt and a tie is
P(R  T) = 0.20

b) The probability that a customer will buy a tie is

P(T) = P(R  T) + P(𝑅T)
ത
= 0.20 + 0.06
= 0.26
c) The probability that a customer will buy a shirt or a tie is
P(RT) = P(RT) + P(𝑅𝑇) ത + P(𝑅T)
ത
= 0.20 + 0.20+0.06
= 0.46
Alternatively, P(RT) = P(R) +P(T) – P(RT)
d) The probability that a customer will buy a tie but not a shirt is
ത
P(𝑅𝑇) = 0.06

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Bayes’ law
• Bayes’ law named after the English clergyman and mathematician
Thomas Bayes, provide us with an alternative formula for calculating
conditional probabilities.
• The alternative formula simplifiers the calculation of P(A|B) when
P(AB) and P(B) are not given directly.
𝑃(𝐴 ∩ 𝐵 ) 𝑃 𝐴 . 𝑃(𝐵|𝐴)
𝑃 𝐴𝐵 = =
𝑃(𝐵) 𝑃 𝐴 . 𝑃 𝐵 𝐴 + [ 𝑃 𝐴ҧ . 𝑃 𝐵 𝐴ҧ

• A generalization of Bayes’s Theorem allows event A to have as many

mutually exclusive and collectively exhaustive categories as we wish
ҧ
(A1, A2, … An) rather than just two dichotomous categories (A and 𝐴).
𝑃 𝐴𝑖 . 𝑃(𝐵|𝐴𝑖 )
𝑃 𝐴𝑖 𝐵 =
𝑃 𝐴1 . 𝑃 𝐵 𝐴1 + 𝑃 𝐴2 . 𝑃 𝐵 𝐴2 + ⋯ . + 𝑃 𝐴𝑛 . 𝑃 𝐵 𝐴𝑛

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Probabilities, Conditional Probabilities and

Derivation of Bayes’ Theorem in Pictures

P(A) = P(B) =
Whole space

A B
P(A|B)= P(B|A)=

P(A  B)=

P(A).P(B|A) = X = = P(A  B)

P(B).P(A|B)= X = = P(A  B)
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Probabilities, Conditional Probabilities and

Derivation of Bayes’ Theorem in Pictures

Whole space P(A|B) X P(B)

P(B|A) =
P(A)
A B

X
=

= X X =

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Example 4
Due to turnover and absenteeism at an assembly plant, 20% of the
items are assembled by inexperienced employees. Management
has determined that customers return 12% of the items assembled
by inexperienced employees, whereas only 3% of the items
assembled by experienced employees are returned. Given that an
item has been returned, what is the probability that it was
assembled by an inexperience employee?

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Example 4 - Solution

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Summary of Formulas
𝑃(𝐴 ∩ 𝐵)
𝑃 𝐴𝐵 =
𝑃(𝐵)

𝑃 𝐴ҧ = 1 − 𝑃 𝐴

𝑃 𝐴∪𝐵 =𝑃 𝐴 +𝑃 𝐵 −𝑃 𝐴∩𝐵

𝑃 𝐴 ∩ 𝐵 = 𝑃 𝐴 .𝑃 𝐵 𝐴
= 𝑃 𝐵 .𝑃 𝐴 𝐵

𝑃 𝐴 ∪ 𝐵 = 𝑃 𝐴 + 𝑃 𝐵 𝑖𝑓 𝐴 𝑎𝑛𝑑 𝐵 𝑎𝑟𝑒 𝑚𝑢𝑡𝑢𝑎𝑙𝑙𝑦 𝑒𝑥𝑐𝑙𝑢𝑠𝑖𝑣𝑒.

𝑃 𝐴 ∩ 𝐵 = 𝑃 𝐴 + 𝑃 𝐵 𝑖𝑓 𝐴 𝑎𝑛𝑑 𝐵 𝑎𝑟𝑒 𝑖𝑛𝑑𝑒𝑝𝑒𝑛𝑑𝑒𝑛𝑡.

𝐼𝑓 𝐴 𝑎𝑛𝑑 𝐵 𝑎𝑟𝑒 𝑖𝑛𝑑𝑒𝑝𝑒𝑛𝑑𝑒𝑛𝑡, 𝑡ℎ𝑒𝑛 𝑃 𝐴 𝐵 = 𝑃 𝐴 𝑎𝑛𝑑 𝑃 𝐵 𝐴 = 𝑃(𝐵)

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How do you analysis following stories ?

1. There was a statistics professor who driving his car, would always
accelerate hard before coming to any Intersection, whip straight through
it, then slow down again once he'd got past it. One day, he took a
passenger, who was understandably unnerved by his driving style, and
asked him why he went so fast over intersections. The statistics professor
replied, "Well, statistically speaking, you are far more likely to have an
accident at an intersection, so I just make sure that I spend less time
there”.
2.

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