5. Probability Theories

  1. Paolo Brandimarte

Published Online: 24 MAY 2011

DOI: 10.1002/9781118023525.ch5

Quantitative Methods: An Introduction for Business Management

Quantitative Methods: An Introduction for Business Management

How to Cite

Brandimarte, P. (2011) Probability Theories, in Quantitative Methods: An Introduction for Business Management, John Wiley & Sons, Inc., Hoboken, NJ, USA. doi: 10.1002/9781118023525.ch5

Publication History

  1. Published Online: 24 MAY 2011
  2. Published Print: 4 APR 2011

ISBN Information

Print ISBN: 9780470496343

Online ISBN: 9781118023525

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Keywords:

  • axiomatic approach;
  • Bayes’ theorem;
  • conditional probability;
  • decision making;
  • probability theory

Summary

This chapter first introduces the axiomatic approach to probability theory, laying down the fundamental concepts of events and probability measures, along with a set of basic rules of the game in order to work with probabilities in a sensible and consistent manner. Then, it introduces conditional probabilities in a mathematically unsophisticated way, though conditioning is a powerful and essential concept that is used to model information availability to decision makers. Conditional probabilities also lead to a powerful result called Bayes’ theorem, which is also discussed in the chapter.

Controlled Vocabulary Terms

Bayes’ theorem; conditional probability; decision making; probability theory