In this video, get an explanation of the concept of conditional probability. Discover how to use probability trees to visualize these types of scenarios.
- Imagine that our office has six workers. Pretend their names are A, B, C, X, Y, Z. Each name is on one of six cards in this bowl. Two cards will be picked at the same time. Those two people will win a $100 gift card. What are the odds that both X and Y will be the winners? Well, we can find that there are 15 combinations of two winners from a group of six people using our combinations formula, but only one of those combinations would result in X and Y as winners, so the probability that both X and Y will win together is one in 15, or 6.67%. In this case, we picked two cards at once. What happens when we pick one card at a time? How do probabilities change as the conditions change? For example, we pick the first card, and it has the name C. Now what are the odds that X and Y will be the two names chosen? Well, since we are only picking two winners, and one of them is C, it's impossible for both X and Y to be the two winners. Remember, before we picked the first card, the probability was 6.67%. After C's name was chosen, the probability dropped to zero. This is what is referred to as conditional probability. Understanding conditional probability is very important in the world of statistics, but as the scenarios become more complex, so do the calculations. In many cases, you'll want to consider using a very helpful tool, a probability tree. Probability trees help you visualize how probabilities will change as the conditions change. Let's look at how to set up and use probability trees.
Eddie explains that probability is used to make decisions about future outcomes and to understand past outcomes. He covers permutations, combinations, and percentiles, and goes into how to describe and calculate them. Eddie introduces multiple event probabilities and discusses when to add and subtract probabilities. He describes probability trees, Bayes’ Theorem, binomials, and so much more. You can learn to understand your data, prove theories, and save valuable resources—all by understanding the numbers.