Contact Us

If you still have questions or prefer to get help directly from an agent, please submit a request.
We’ll get back to you as soon as possible.

Please fill out the contact form below and we will reply as soon as possible.

  • Courses
  • Tutoring
  • Home
  • Law, Transactions, & Risk Management
  • Insurance & Risk Management

Unconditional Probability - Explained

What is Unconditional Probability?

Written by Jason Gordon

Updated at September 27th, 2021

Contact Us

If you still have questions or prefer to get help directly from an agent, please submit a request.
We’ll get back to you as soon as possible.

Please fill out the contact form below and we will reply as soon as possible.

  • Marketing, Advertising, Sales & PR
    Principles of Marketing Sales Advertising Public Relations SEO, Social Media, Direct Marketing
  • Accounting, Taxation, and Reporting
    Managerial & Financial Accounting & Reporting Business Taxation
  • Professionalism & Career Development
  • Law, Transactions, & Risk Management
    Government, Legal System, Administrative Law, & Constitutional Law Legal Disputes - Civil & Criminal Law Agency Law HR, Employment, Labor, & Discrimination Business Entities, Corporate Governance & Ownership Business Transactions, Antitrust, & Securities Law Real Estate, Personal, & Intellectual Property Commercial Law: Contract, Payments, Security Interests, & Bankruptcy Consumer Protection Insurance & Risk Management Immigration Law Environmental Protection Law Inheritance, Estates, and Trusts
  • Business Management & Operations
    Operations, Project, & Supply Chain Management Strategy, Entrepreneurship, & Innovation Business Ethics & Social Responsibility Global Business, International Law & Relations Business Communications & Negotiation Management, Leadership, & Organizational Behavior
  • Economics, Finance, & Analytics
    Economic Analysis & Monetary Policy Research, Quantitative Analysis, & Decision Science Investments, Trading, and Financial Markets Banking, Lending, and Credit Industry Business Finance, Personal Finance, and Valuation Principles
  • Courses
+ More

Table of Contents

What is Unconditional Probability?How is Unconditional Probability Used?Example of Unconditional ProbabilityAcademic Research on Unconditional Probability

What is Unconditional Probability?

An unconditional probability is a probability theory that holds that an event is likely going to occur whether or not other events occur. In this theory, the chance of the occurrence of an event is not dependent on other events. External circumstances have no effect on the outcome of an event using the unconditional probability. Hence, there is probability for the event to have a particular result regardless of other conditions or forces present.

Back To: INSURANCE & RISK MANAGEMENT

How is Unconditional Probability Used?

Unlike conditional probability in which an event is likely to occur only if another event occurs, events under unconditional probability form no dependence on the occurrence of other events. Also, the outcomes of events under unconditional probability can be independent of other factors or possible outcomes present. Another name for unconditional probability is marginal probability, this theory gives no regard to other events present or other likely outcomes. Rather, an event can happen and outcome be achieved irrespective of whether other options are present or otherwise. Also, the outcomes of previous events do not determine the outcome of the present event, they run independent of one another.

Example of Unconditional Probability

The common example of unconditional probability is the probability that it will snow in northwestern Wyoming regardless of the fact that previous data and other events have contrary reports. This is an unconditional probability which maintains that the snow is likely to happen independent of historical weather forecasts or available data. Unconditional probability can also be used for a group of stocks, in this case, a stock is like to give a specific result regardless of the presence or performance of other stocks in that group. If there are five stocks in a portfolio for example, one of them might outperform other stocks irrespective of market forces or the poor performance of other stocks.

Related Topics

  • Forecasting (Business)
  • Objective Probability
  • Unconditional Probability

Academic Research on Unconditional Probability

  • On the numerical representation of qualitative conditional probability, Luce, R. D. (1968). On the numerical representation of qualitative conditional probability. The Annals of Mathematical Statistics, 39(2), 481-491.

Was this article helpful?

Yes
No

Related Articles

  • Requirements for Cancelling an Insurance Contract - Explained
  • Enterprise Risk Management (ERM) - Explained
  • American Association of Insurance Services - Explained



©2011-2023. The Business Professor, LLC.
  • Privacy

  • Questions

Definition by Author

0
0
Expand