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Academic Research
UNIVERSITY Methods
RANKINGS and Ethics
 Gambling, Probability, and Risk

• INSTRUCTOR : Prof. Dr. Ufuk Türen

• E-MAIL : [email protected]

• SHEDULE : Friday - 18.00-20.50

• PLACE : Class no - 424

3
 Course Content
Introduction to Course and Research
WEEK 1 WEEK 9 Introduction to SPSS
Methodology
Fundamentals of Probability for
WEEK 2 WEEK 10
Business Research
SPSS-I
WEEK 3 Choosing a research topic and WEEK 11
WEEK 4 Literature Review
WEEK 12 SPSS-II
Research Design ethics and
WEEK 5
Sampling
WEEK 13 Sample Anaysis
The Concept of Measurement,
WEEK 6 Attitude Measurement and Attitude Ethics in Scientific Research
WEEK 14
Scales Research Report Preparation

WEEK 7 Sampling Fundamentals WEEK 15 In class presentations

WEEK 8 Midterm Exam WEEK 16 Final Exam

4
 Grading Homework

• Midterm Exam (30%)

Problem based
• Final Exam (50%)
homeworks – Each week
• Homeworks (20%)

5
Gambling, Probability, and Risk
(Basic Probability and Counting
Methods)

6
 A gambling experiment
• Everyone in the room takes 2 cards
from the deck (keeps it face down)
• Rules, most to least valuable:
• Pair of the same color (both red or both
black)
• Mixed-color pair (1 red, 1 black)
• Any two cards of the same suit
• Any two cards of the same color

In the event of a tie, highest card wins (ace is top)

7
 What do you want to bet?

• Look at your two cards.

• Will you fold or bet?
• What is the most rational strategy
given your hand?

8
 Rational strategy
• There are N people in the room
• What are the chances that someone
in the room has a better hand than
you?
• Need to know the probabilities of
different scenarios
• We’ll return to this later in the
lecture…

9
 Probability
• Probability – the chance that an uncertain event will
occur (always between 0 and 1)
Symbols:
P(event A) = “the probability that event A will occur”
P(red card) = “the probability of a red card”
P(~event A) = “the probability of NOT getting event A” [complement]
P(~red card) = “the probability of NOT getting a red card”
P(A & B) = “the probability that both A and B happen” [joint probability]
P(red card & ace) = “the probability of getting a red ace”

10
 Assessing Probability
1. Theoretical/Classical probability—based on theory (a
priori understanding of a phenomena)
• theoretical probability of rolling a 2 on a standard die is 1/6
• theoretical probability of choosing an ace from a standard
deck is 4/52
• theoretical probability of getting heads on a regular coin is
1/2
2. Empirical probability—based on empirical data
• You toss an irregular die (probabilities unknown) 100 times
and find that you get a 2 twenty-five times; empirical
probability of rolling a 2 is 1/4
• Empirical probability of an Earthquake in Bay Area by 2032
is .62 (based on historical data)
• Empirical probability of a lifetime smoker developing lung
cancer is 15 percent (based on empirical data)
11
 Recent headlines on earthquake
probabilities…

http://www.guardian.co.uk/world/2011/may/26/italy-quake-experts-manslaughter-charge

12
 Computing theoretical probabilities:
counting methods
Great for gambling! Fun to compute!

If outcomes are equally likely to occur…

# of ways A can occur

P( A) 
total # of outcomes
Note: these are called “counting methods” because we have to count the
number of ways A can occur and the number of total possible outcomes.
13
 Counting methods: Example 1
Example 1: You draw one card from a deck of cards.
What’s the probability that you draw an ace?

# of aces in the deck 4

P(draw an ace)    .0769
# of cards in the deck 52

14
 Counting methods: Example 2
Example 2. What’s the probability that you draw 2 aces
when you draw two cards from the deck?
# of aces in the deck 4
P(draw ace on first draw)  
# of cards in the deck 52

# of aces in the deck 3

P(draw an ace on second draw too)  
# of cards in the deck 51

4 3
P(draw ace AND ace)  x
52 51
This is a “joint probability”—we’ll get back to this in our next class
15
 Counting methods: Example 2
Two counting method ways to calculate this:
1. Consider order:

# of ways you can draw ace, ace

P (draw 2 aces) 
# of different 2 - card sequences you could draw
52 cards 51 cards
Numerator: AA, AA, AA, AA, AA, AA, AA,
AA, AA, AA, AA, or AA = 12

Denominator = 52x51 = 2652 -- why? .

.
.

12
 P (draw 2 aces) 
52 x51
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 Counting methods: Example 2
2. Ignore order:

# of pairs of aces
P (draw 2 aces) 
# of different two - card hands you could draw

Numerator: AA, AA, AA, AA, AA, AA = 6

52 x51
Denominator =  1326
2 Divide out order!

6
 P (draw 2 aces) 
52 x51
2
17
 Summary of Counting Methods
Counting methods for computing probabilities

Permutations— Combinations—
order matters! Order doesn’t matter

With replacement
Without replacement

Without replacement

18
 Summary of Counting Methods
Counting methods for computing probabilities

Permutations— Combinations—
order matters! Order doesn’t matter

With replacement
Without replacement

Without replacement

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 Permutations—Order matters!
• A permutation is an ordered
arrangement of objects.
– With replacement once an
event occurs, it can occur
again (after you roll a 6, you
can roll a 6 again on the
same die).
– Without replacement an
event cannot repeat (after
you draw an ace of spades
out of a deck, there is 0
probability of getting it
again).
20
 Summary of Counting Methods
Counting methods for computing probabilities

Permutations— Combinations—
order matters! Order doesn’t matter

With replacement
Without replacement

Without replacement

21
 Permutations—with replacement
With Replacement – Think coin Toss 1: Toss 2:
tosses, dice, and DNA. 2 outcomes 2 outcomes
H 22 total possible outcomes:
“memoryless” – After you get heads, H
T {HH, HT, TH, TT}
you have an equally likely chance of H
getting a heads on the next toss T
T
(unlike in cards example, where you
can’t draw the same card twice from
a single deck).
1 way to get HH
What’s the probability of getting two P ( HH )  2
heads in a row (“HH”) when tossing 2 possible outcomes
a coin?

22
 Permutations—with replacement
What’s the probability of 3 heads in a row?
Toss 3:
2 outcomes
Toss 2:
HHH
2 outcomes H
Toss 1:
T HHT
2 outcomes H
H HTH 1
T P( HHH ) 
H T 2 3  8 possible outcomes
HTT

T H H THH

T
T THT
H
TTH
T
TTT
23
 Permutations—with replacement
When you roll a pair of dice (or 1 die twice), what’s the
probability of rolling 2 sixes?

1 way to roll 6, 6 1
P(6,6) 
62 36

What’s the probability of rolling a 5 and a 6?

2 ways : 5,6 or 6,5 2

P(5 & 6)  2

6 36
24
 Summary: order matters, with
replacement
Formally, “order matters” and “with
replacement” use powers

the # of events r
(# possible outcomes per event) n

25
 Summary of Counting Methods
Counting methods for computing probabilities

Permutations— Combinations—
order matters! Order doesn’t matter

With replacement
Without replacement

Without replacement

26
 Permutations—without replacement
Without replacement—Think cards (w/o
reshuffling) and seating arrangements.

Example: You are moderating a debate

of gubernatorial candidates. How many
different ways can you seat the
panelists in a row? Call them Arianna,
Buster, Camejo, Donald, and Eve.

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 Permutations—without replacement
 “Trial and error” method:
Systematically write out all combinations:
ABCDE
ABCED
ABDCE
Quickly becomes a pain!
ABDEC
Easier to figure out
ABECD patterns using a the
probability tree!
ABEDC
.
.
.

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 Permutations—without replacement
Seat One: Seat Two: Etc….
5 possible only 4 possible

A
A
B
B
C …….
D
D E
E A
B
C
D

# of permutations = 5 x 4 x 3 x 2 x 1 = 5!

There are 5! ways to order 5 people in 5 chairs (since a person cannot repeat)

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 Permutations—without replacement
What if you had to arrange 5 people in only 3 chairs
(meaning 2 are out)?

Seat One: Seat Two: Seat Three:

5 possible Only 4 possible
only 3 possible

B
A
A
D
5 x 4 x3 x 2 x1 5! 5!
5 x 4 x3   
B E
B

D
C D
E 2 x1 2! (5  3)!
E A
B
C
D

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Permutations—without replacement

Note this also works for 5 people and 5 chairs:

5! 5!
  5!
(5  5)! 0!

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 Permutations—without replacement
How many two-card hands can I draw from a deck when order matters
(e.g., ace of spades followed by ten of clubs is different than ten of
clubs followed by ace of spades)
52 cards 51 cards

52!
 52 x51
(52  2)!
.
. .
. .
.

32
Summary: order matters, without
replacement
Formally, “order matters” and “without
replacement” use factorials

(n people or cards)! n!

(n people or cards  r chairs or draws)! (n  r )!
or n(n  1)(n  2)...(n  r  1)

33
 Practice problems
1. A wine taster claims that she can distinguish four
vintages or a particular Cabernet. What is the probability
that she can do this by merely guessing (she is
confronted with 4 unlabeled glasses)? (hint: without
replacement)
2. In some states, license plates have six characters: three
letters followed by three numbers. How many distinct
such plates are possible? (hint: with replacement)

34
 Answer 1
1. A wine taster claims that she can distinguish four vintages or a particular
Cabernet. What is the probability that she can do this by merely guessing
(she is confronted with 4 unlabeled glasses)? (hint: without replacement)

P(success) = 1 (there’s only way to get it right!) / total # of guesses she could make

Total # of guesses one could make randomly:

glass one: glass two: glass three: glass four:

4 choices 3 vintages left 2 left no “degrees of freedom” left

= 4 x 3 x 2 x 1 = 4!

P(success) = 1 / 4! = 1/24 = .04167

35
 Answer 2
2. In some states, license plates have six characters: three
letters followed by three numbers. How many distinct such
plates are possible? (hint: with replacement)

263 different ways to choose the letters and 103 different ways to
choose the digits

total number = 263 x 103 = 17,576 x 1000 = 17,576,000

36
 Summary of Counting Methods
Counting methods for computing probabilities

Permutations— Combinations—
order matters! Order doesn’t matter

With replacement
Without replacement

Without replacement

37
 Combinations—Order doesn’t matter
Introduction to combination function, or
“choosing”
n
Written as: n C r or  
r
Spoken: “n choose r”

38
 Combinations
How many two-card hands can I draw from a deck when order does
not matter (e.g., ace of spades followed by ten of clubs is the same as
ten of clubs followed by ace of spades)

52 cards 51 cards

52 x51 52!
 .

(52  2)!2
.

2
.
. .
.

39
 Combinations
How many five-card hands can I draw from a deck when order does not matter?

48 cards
49 cards
50 cards

51 cards

52 cards .
.
.
.
.
.

52 x51x50 x 49 x 48
.
. .
. .
.

?
40
 Combinations

1.

2.

3.

How many repeats in total?

41
 Combinations

1.

2.

3.

how many different ways can you arrange 5 cards…?

42
 Combinations

That’s a permutation without replacement.

5! = 120

52 x51x50 x 49 x 48 52!
total # of 5 - card hands  
5! (52  5)!5!

43
 Combinations
• How many unique 2-card sets out of 52 cards?

52 x51 52!
• 5-card sets? 
2 (52  2)!2!

52 x51x50 x 49 x 48 52!
• r-card sets? 
5! (52  5)!5!

52!
• r-card sets out of n-cards?
(52  r )! r!
n n!
 
 r  ( n  r )! r!
44
 Summary: combinations
If r objects are taken from a set of n objects without replacement
and disregarding order, how many different samples are possible?

Formally, “order doesn’t matter” and “without replacement” use choosing

  n n!
 
 r  (n  r )!r!
45
 Examples—Combinations
A lottery works by picking 6 numbers from 1 to 49. How many
combinations of 6 numbers could you choose?

 49  49!
   13,983,816
 6  43!6!

Which of course means that your probability of winning is 1/13,983,816!

46
 Examples
How many ways can you get 3 heads in 5 coin tosses?

  5!
5
   10
 3  3!2!
47
 Summary of Counting Methods
Counting methods for computing probabilities

Combinations—
Permutations—order Order doesn’t matter
matters!

With replacement: nr
Without replacement:

Without replacement: n n!

 
n(n-1)(n-2)…(n-r+1)=  r  ( n  r )! r !
n!
( n  r )!

48
 Gambling, revisited

• What are the probabilities of the

following hands?
Pair of the same color
Pair of different colors
Any two cards of the same suit
Any two cards of the same color

49
 Pair of the same color?

# pairs of same color

P(pair of the same color) =
total # of two  card combinations

Numerator = red aces, black aces; red kings, black kings; etc.…= 2x13 = 26

52x51
Denominator  52 C2   1326
2
26
So, P(pair of the same color)   1.96% chance
1326 50
 Any old pair?
# pairs
• P(any pair) = total # of two  card combinations  1326

4! 4 x3
number of different possible pairs of aces  4 C 2   6
2!2! 2
4! 4 x3
number of different possible pairs of kings  4 C 2   6
2!2! 2
...
13x6  78 total possible pairs
78
 P(any pair)   5.9% chance
1326
51
 Two cards of same suit?

13!
Numerator : 13 C 2 x 4 suits  x 4  78 x 4  312
11!2!

312
 P(two cards of the same suit)   23.5% chance
1326

52
 Two cards of same color?
Numerator: 26C2 x 2 colors = 26!/(24!2!) = 325 x 2 = 650
Denominator = 1326
So, P (two cards of the same color) = 650/1326 = 49% chance
A little non-intuitive? Here’s another way to look at it…
52 cards From a Red branch: 26 black left, 25 red left
26 red branches
26 black branches
26x25 RR
26x26 RB 50/102
.
.
.
26x26 BR Not quite
. From a Black
. branch: 26 red left, 25 black left
. 50/100
26x25 BB

53
 Rational strategy?

• To bet or fold?
– It would be really complicated to take into
account the dependence between hands in
the class (since we all drew from the same
deck), so we’re going to fudge this and
pretend that everyone had equal
probabilities of each type of hand (pretend
we have “independence”)…
– Just to get a rough idea...

54
 Rational strategy?
**Trick! P(at least 1) = 1- P(0)
P(at least one same-color pair in the class)=
1-P(no same-color pairs in the whole class)=

P(I don' t get a same - color pair)  1 - .0196  .98

P(no same - color pairs in the whole class)  (.98) * (.98) * (.98)....  (.98) 40

1 - (.98) 40  1 - .446  55.4% chance of at least one same - color pair

 Rational strategy?

• P(at least one pair)= 1-P(no pairs)=1-(.94)40=1-8%=92% chance

• P(>=1 same suit)= 1-P(all different suits)=1-(.765)40=1-.00002 ~ 100%

• P(>=1 same color) = 1-P(all different colors)=1-(.51) 40=1.000000000002 ~ 100%

 Rational strategy…
• Fold unless you have a same-color pair or a numerically
high pair (e.g., Queen, King, Ace).

How does this compare to class?

-anyone with a same-color pair?
-any pair?
-same suit?
-same color?
 Practice problem:
• A classic problem: “The Birthday Problem.” What’s the probability
that two people in a class of 25 have the same birthday? (disregard
leap years)

What would you guess is the probability?

 Birthday Problem Answer
1. A classic problem: “The Birthday Problem.” What’s the probability that two people in a
class of 25 have the same birthday? (disregard leap years)
**Trick! 1- P(none) = P(at least one)
Use complement to calculate answer. It’s easier to calculate 1- P(no matches) = the
probability that at least one pair of people have the same birthday.
What’s the probability of no matches?
Denominator: how many sets of 25 birthdays are there?
--with replacement (order matters)
36525
Numerator: how many different ways can you distribute 365 birthdays to 25 people without
replacement?
--order matters, without replacement:
[365!/(365-25)!]= [365 x 364 x 363 x 364 x ….. (365-24)]

 P(no matches) = [365 x 364 x 363 x 364 x ….. (365-24)] / 36525

 In this class?
• --Jan?
• --Feb?
• --March?
• --April?
• --May?
• --June?
• --July?
• --August?
• --September?
• ….
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