Subjective Probability - Explained
What is Subjective Probability?
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Table of ContentsWhat is Subjective Probability?How is Subjective Probability Used?How Subjective Probability WorksExamples of Subjective ProbabilityAcademic Research on Subjective Probability
What is Subjective Probability?
Subjective probability refers to a form of probability that is based on the opinion of perspectives of individuals about an occurrence. Subjective probability is formed from the experience of an individual and personal belief as to whether an outcome is likely to occur or otherwise. Subjective probability is not derived from any formal or mathematical calculations of the likely occurrence of an outcome, rather, it is based on an individual's beliefs.
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How is Subjective Probability Used?
Since subjective probability is dependent on the views, experiences and beliefs of an individual in the lonely occurrence of an outcome, subjective probability differ from one person to another. Subjective probability is different from objective probability which is derived from formal calculations and analysis of the likelihood of the occurrence of an outcome. Objective probability is derived from the analysis of data derived from historical events and observations. Subjective probability on the other hand, is often injected with a high degree of personal bias.
How Subjective Probability Works
The theory of probability rests on the idea that an event is likely to occur based on certain factors. It also consists the likelihood of certain outcomes emanating from the occurrence of an event. Generally, a mathematical approach is deployed in calculating the likelihood of an event. Subjective probability is a type of probability that is derived from the opinions of individuals in the likelihood of an event. Hence, personal biases and beliefs can affect subjective probability. The background of different individuals, their past experiences, personally held opinions and a wide range of factors can affect subjective probability. Here are some important things to know about subjective probability;
- It is a type of probability that stems from the opinions and personal judgement of individuals to the likelihood of an event or outcome.
- Subjective probability differs from one person to another.
- This type of probability is highly dominated by personal biases and subjected to people's opinions.
- Subjective probability requires no mathematical, computerized or formal calculations.
Examples of Subjective Probability
There are few instances of subjective probability, this type of probability can be applied to business, games, sports and others. One of the common examples of subjective probability was when New York Yankee's baseball fans were asked about the chances of the club winning the cup that season. Since this type of probability requires no formal calculations or mathematical proof but relies on the experience and personal opinions of the fans, it is subjective probability. Also, in a rugby game, fans can be asked to predict the chances of the winner, regardless of how inaccurate their predictions are, it is regarded as subjective probability.