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Thread: Probability of Events in Equations

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    Probability of Events in Equations




    Hello,

    This may be an easy question, but I would like to know how to incorporate the probability of an event in a linear (or non linear) equation.

    For example, say I have the following linear equation: Y = (100X * W) + 20T + 10M - 50.

    I collect data from an experiment, and find values X, W, T and M - no problem, I can now find Y. However, I found that W only has a 25% chance of occurring for any given experiment.

    Can I (or how do I) incorporate this probability into my equation to produce a more accurate model?

    Thanks!

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    Re: Probability of Events in Equations

    I don't understand why knowing the probability that an event occurs would change the model?
    I don't have emotions and sometimes that makes me very sad.

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    Re: Probability of Events in Equations

    It would not change the model. It would change the distribution of the response. I would use Monte Carlo simulation. Just specify the distribution or probabilities of your different inputs, run the simulation and evaluate the distribution of the ouput. Follow up with a sensitivity analysis to determine which inputs drive the most variation in output.

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    Re: Probability of Events in Equations


    Thanks for the tips. I wasn't sure if I was able to do that or not. I was using the following model Y = (100X * [W*0.25]) + 20T + 10M - 50 to represent the 25% probability of W, but you were right, this changes my response. I removed this, and performed the monte carlo simulation and found the error in my model to be about 0.4%.

    You mentioned performing sensitivity analysis...how do I do this? I cannot seem to find any simple tutorial online to perform this?

    Thank you.

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