probability &

mathematical
expectation
By: Noreen M. Albrando
Why learn Probability?
• Nothing in life is certain. In everything
we do, we gauge the chances of
successful outcomes, from business to
medicine to the weather.
• A probability provides a quantitative
description of the chances or
likelihoods associated with various
outcomes.
• It provides a bridge between
descriptive and inferential statistics.
What is Probability?
• Probability is a measure of the
likelihood of a random phenomenon
or chance behavior.
• It describes the long-term proportion
with which a certain outcome will
occur in situations with short-term
uncertainty.
• Probability deals with experiments that
yield random short-term results or
outcomes, yet reveal long-term
predictability.
• The long-term proportion with which a
certain outcome is observed is the
probability of that outcome.
Basic Concepts

• An experiment is the process by which

an observation (or measurement) is
obtained. It is any process that can be
repeated in which the results are
uncertain.
• An event is an outcome of an
experiment.
• The basic element to which probability is
applied.
• When an experiment is performed, a
particular event either happens, or it
doesn’t.
• The sample space, S, of a probability
experiment is the collection of all
possible simple events. In other words,
the sample space is a list of all possible
outcomes of a probability experiment.
• The probability of an event, denoted
P(E), is thelikelihood of that event
occurring.
Properties of Probabilities
1. The probability of any event E, P(E),
must be between 0 and 1 inclusive.
That is, 0 < P(E) < 1.
2. If an event is impossible, the
probability of the event is 0.
3. If an event is a certainty, the
probability of the event is 1.
4. If S = {e1, e2, …, en}, then
P(e1) + P(e2) + … + P(en) = 1.
• An unusual event is an event that has
a low probaility of occurring.
Methods for Determining
the Probability of an Event

1) the classical method

2) the empirical method

3) the subjective method

Classical Method
• The classical method of computing
probabilities requires equally likely
outcomes.
• An experiment is said to have equally
likely outcomes when each simple
event has the same probability of
occurring.
Computing Probability
Using the Classical Method

• Also known as the “a priori” approach

defines probability in terms of whether
an event may or may not occur
provided that each outcome is
equally likely to happen
Computing Probability
Using the Classical Method
• Thus,
𝑛𝑜. 𝑜𝑓 𝑜𝑢𝑡𝑐𝑜𝑚𝑒𝑠 𝑓𝑎𝑣𝑜𝑟𝑎𝑏𝑙𝑒 𝑡𝑜
𝑡ℎ𝑒 𝑜𝑐𝑐𝑢𝑟𝑟𝑎𝑛𝑐𝑒 𝑜𝑓 𝑡ℎ𝑒 𝑒𝑣𝑒𝑛𝑡
𝑃𝑟𝑜𝑏𝑎𝑏𝑖𝑙𝑖𝑡𝑦 𝑜𝑓 𝑎𝑛 𝑒𝑣𝑒𝑛𝑡 =
𝑡𝑜𝑡𝑎𝑙 𝑛𝑜. 𝑜𝑓 𝑝𝑜𝑠𝑠𝑖𝑏𝑙𝑒 𝑜𝑢𝑡𝑐𝑜𝑚𝑒𝑠

• In symbol,
𝑎
𝑃(𝐴) = for any event of A
𝑎+𝑏
Example 1:
Classical Method

• What is the probability of getting

heads in a single toss of a balanced
peso coin?
Example 1:
Classical Method

• SOLUTION
The number of outcomes favorable to the
occurrence of head in one toss is 1. And
since there are only 2 sides to a coin (head
and tail)

1 1
Therefore : 𝑃𝑛 = =
1+1 2
Example 2:
Classical Method

• In the experiment of rolling a pair of

dice, what is the probability of getting
a sum greater than 8?
Example 2:
Classical Method
• SOLUTION
Die 1/ 1 2 3 4 5 6
Die 2

1 (1, 1) (1, 2) (1, 3) (1, 4) (1, 5) (1, 6)

2 (2, 1) (2, 2) (2, 3) (2, 4) (2, 5) (2, 6)
3 (3, 1) (3, 2) (3, 3) (3, 4) (3, 5) (3, 6)
4 (4, 1) (4, 2) (4, 3) (4, 4) (4, 5) (4, 6)
5 (5, 1) (5, 2) (5, 3) (5, 4) (5, 5) (5, 6)
6 (6, 1) (6, 2) (6, 3) (6, 4) (6, 5) (6, 6)
Example 2:
Classical Method
• Favorable Outcomes
Die 1/ 1 2 3 4 5 6
Die 2

1 (1, 1) (1, 2) (1, 3) (1, 4) (1, 5) (1, 6)

2 (2, 1) (2, 2) (2, 3) (2, 4) (2, 5) (2, 6)
3 (3, 1) (3, 2) (3, 3) (3, 4) (3, 5) (3, 6)
4 (4, 1) (4, 2) (4, 3) (4, 4) (4, 5) (4, 6)
5 (5, 1) (5, 2) (5, 3) (5, 4) (5, 5) (5, 6)
6 (6, 1) (6, 2) (6, 3) (6, 4) (6, 5) (6, 6)
Example 2:
Classical Method
• SOLUTION
The number of favorable outcome is 10.
The total possible outcomes is 36.

10
𝑃 𝑠𝑢𝑚 > 8 =
36
= 𝟎. 𝟐𝟕𝟕𝟖
Computing Probability
Using the Empirical Method

• By this approach, probability may be

defined as the proportion of times that
favorable outcomes occur in a
number of experiments over a period
of time.
• It may also be defined as the
observed relative frequency of an
event in a very large number of trials.
Example 1:
Empirical Method

• Insurance records show that out of

100,000 men alive at age 40, only
55,000 live up to age 50. What is the
probability that a man insured
a) May reach the age of 50?
b) May die before he reaches 50?
Example 1:
Empirical Method

• SOLUTION
55,000
a) 𝑃 = 100,000
= 0.55 𝑥 100 = 55%

45,000
b) 𝑃 = 100,000
= 0.45 𝑥 100 = 45%

or 𝑃 𝑓 = 1 − 0.55 = 0.45 𝑥 100 = 45%

Example 2:
Empirical Method

• In a double round robin Basketball

games composed of 8 teams, Team A
was able to win over 3 teams. In the
second round, what is the probability
of team A winning a game?
Example 2:
Empirical Method

• SOLUTION
Number of wins = 3
Number of games played = 7

𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑤𝑖𝑛𝑠
𝑃 𝑡𝑒𝑎𝑚 𝐴 𝑤𝑖𝑛𝑛𝑖𝑛𝑔 𝑎 𝑔𝑎𝑚𝑒 =
𝑛𝑜. 𝑜𝑓 𝑔𝑎𝑚𝑒𝑠 𝑝𝑙𝑎𝑦𝑒𝑑 𝑏𝑦 𝑡𝑒𝑎𝑚 𝐴
3
=
7
= 𝟎. 𝟒𝟐𝟖𝟔
Computing Probability Using
the Subjective Method

• It is a method of assigning probability

based on available information,
insights, expeiences, personal
encounters or expertise of a person.
Computing Probability Using
the Counting Techniques
• If an experiment has a little number of
outcomes, it will be very easy for us to
just list down or enumerate possible
outcomes.
• Counting techniques
a) Inclusion/ Exclusion Principle
b) Venn Diagram
c) Multiplication Rule
d) Permutation
e) Combination
1. Inclusion/ Exclusion
Principle
• Given A and B are two arbitrary sets
and let n represent the number of
elements in a set. Then

𝑛 𝐴 ∪ 𝐵 = 𝑛 𝐴 + 𝑛 𝐵 − 𝑛(𝐴 ∩ 𝐵)

• The number of elements in the union

of two sets is equal to the sum of the
elements of the two sets less the
number of elements in their
intersection.
Example:
Inclusion/ Exclusion
• One hundred respondents were interviewed
of their music preference between rock (R)
and classical (C). The result is shown below.

n(R) = 56
n(C ∩ R) = 26
n(C U R) = 96

• How many respondents preferred classical

only?
Example:
Inclusion/ Exclusion
SOLUTION:
n(C U R) = n(C) + n(R) – n(C ∩ R)
96 = n(C) + 56 – 26
96 = n(C) +30
n(C) = 96 – 30
n(C) = 66

*** Note:
There are 66 who preferred classical and this
includes the 26 who also preferred rock.
Therefore the number of students who
preferred classical only is 66 – 26 = 40.
2. Venn Diagram
• Venn diagrams represent events as
circles enclosed in a rectangle. The
rectangle represents the sample
space and each circle represents an
event.
• It is an effective way of enumerating
the number of elements given some
conditions.
• If events E and F have no simple
events in common or cannot occur
simultaneously, they are said to be
disjoint or mutually exclusive.
Addition Rule for Mutually
Exclusive Events
• If E and F are mutually exclusive
events, then
P(E or F) = P(E) + P(F)
• In general, if E, F, G, … are mutually
exclusive events, then
P(E or F or G or …) = P(E) + P(F) + P(G) + …
Events E and F Events E, F and
are Mutually G are Mutually
Exclusive Exclusive
Example:
Venn Diagram
A question was asked to 50 students
whether they can speak English or Filipino
or both languages.
The result is tabulated below.
38 can speak English
29 can speak Filipino
20 can speak both languages

How many of the 50 students can speak

a) English or Filipino?
b) Exactly one language?
c) English only?
d) Filipino only?
e) Neither of two languages
Example:
Venn Diagram
• SOLUTION

E F

3 18 20 9
Example:
Venn Diagram
a) English or Filipino = 18 + 20 + 9 = 47

b) Exactly one language = 18 + 9 = 27

c) English only = 18

d) Filipino only =9

e) Neither of two languages =3

3. Multiplication Rule
• If an event can be done in m ways
and another event in n ways, then the
total number of ways is obtained by
multiplying the number of ways these
events can be made.
• Let E1 = m ways
E2 = n ways

TNW = mxn
• Note that the multiplication rule only
involves two events.
• However, we use the generalized
multiplication rule to compute the
total number of ways in which more
than two events can be made.
Generalized
Multiplication Rule
• If an event 1 (E1) can be done in n1 of
ways, E2 in n2 ways and Ek in nk ways,
then the total number of ways is
obtained by

TNW = n1 . n2 . . .. nk ways.
Example:
General Multiplication Rule

• How many 4-letter passwords of

distinct characters can be formed
using the letters a to o?
Example:
General Multiplication Rule

Let E1 = Choice of 1st letter = 15 ways

E2 = Choice of 2nd letter = 14 ways
E3 = Choice of 3rd letter = 13 ways
E4 = Choice of 4th letter = 12 ways

TNW = (15)(14)(13)(12)

= 32,760 4-letter passwords

4. Permutation
• Permutation is a counting technique
where order of the objects is
important.
• There are three cases under this
counting technique.
Case 1 - Permutation
• n items taken all a time.

Formula:
nPn = n!(read as n factorial)
n! = n(n-1)(n-2)…(2)(1)
Case 2 - Permutation
• n items taken all at a time where some
items are repeated.

Formula:
𝑛!
nPn =
𝑛1!𝑛2!…𝑛𝑘!

Where nk = repeated objects

Case 3 - Permutation
• n items taken r at a time where r is a
subset of n.

Formula:
𝑛!
nPr =
(𝑛−𝑟)!
Examples:
Permutation
1. In how many ways can four persons
A, B, C and D sit in a row where A
and B are seated beside each
other?
2. How many ways can we arrange the
letters in the word “MISSISSIPPI?”
3. How many ways can a president
and a vice president be chosen from
5 candidates?
Answers

1. 12 ways : TNW = (3!)(2!)

11!
2. 34,650 ways : nPn =
4!4!2!

5!
3. 20 ways : 5P2 =
(5−2)!
5. Combination
• A counting technique where order is
not of importance.

Formula:
𝑛!
nCr =
𝑟!(𝑛−𝑟)!
Example:
Combination

• How many ways can a student select

5 essay questions from 15 questions?
Example:
Combination
• SOLUTION
n = 15 r=5

𝑛!
nCr =
𝑟!(𝑛−𝑟)!
15!
15C5 =
5!(15−5)!
15!
=
5!10!
= 3,003 ways
What is Mathematical
Expectation?
• Sometimes referred to as Expected
Monetary Value (EMV)
• May be defined as the amount one
expects to receive (as winnings, gains,
profits) or expects to pay (as losses or
penalties) on the occurrence of a
particular event.
• Mathematical Expectation represented
by ME depends on two factors, namely:
• The amount expected with the occurrence of
an event and
• The probability that the event will occur.
• Thus, if P represents the probability that
an event will occur, and X the amount
expected to receive or to pay, then the
formula for mathematical expectation is:
ME = P (X)
• When several events are expected to
occur, with each even having its own
expectation:

𝑀𝐸 = 𝑃1 (𝑋1 ) + (𝑃2 (𝑋2 ) + 𝑃3 (𝑋3 ) + ⋯ + 𝑃𝑛 (𝑋𝑛 )

• In short; 𝑛

𝑀𝐸 = ෍ 𝑃𝑖 (𝑋𝑖 )
𝑖=1
• It should also be noted that the values
of X are positive for amounts expected
to receive and negative for amounts
expected to be paid.
• Mathematical expectation is equal to
zero (0) in a fair and equitable game
when the probability of winning a
certain amount equals the probability
of losing the same amount.
Example 1:
Mathematical Expectation
• What is the mathematical expectation
if a person stands to win P 5.00 for
each head and lose P 5.00 for each
tail in several tosses of a balanced
coin?
Example 1:
Mathematical Expectation
• SOLUTION
1
P1 = (for head) X1 = P5
2
1
P2 = (for tail) X2 = P5
2

∴ 𝑀𝐸 = 𝑃1 𝑋1 + 𝑃2 𝑋2
1 1
= (𝑃5) + (−𝑃5)
2 2
1 1
= − =𝟎
2 2
Example 2:
Mathematical Expectation
• What is a fair price to pay for a raffle
ticket if one can win P10,000.00 with a
probability of 0.002 and P5,000.00 with
a probability of 0.002?
Example 2:
Mathematical Expectation
• SOLUTION
P1 = 0.002 X1 = P10,000
P2 = 0.002 X2 = P5,000

• The fair price to pay for the raffle ticket is the

mathematical expectation of the ticket
holder.
𝑀𝐸 = 𝑃1 𝑋1 + 𝑃2 𝑋2
= 0.002(𝑃10,000) + 0.002 (𝑃5,000)
= 𝑃20 + 𝑃10
= 𝑷 𝟑𝟎
The fair price to pay for the ticket is P 30.00
thank
you!