Re:Tesla stock tumbles after Model S catches fire
by chimeracoder on Thursday October 03, 2013 @01:09PM
(#6490335)
Time for some fun with binomial probabilities!
Assuming I interpret the actual problem at hand correctly, this is how we formulate it statistically.
We have an event that occurs with probability p = 1/1000000, given an accident (of which there were 13).
The probability of having zero catastrophic events, given that we have observed 13 accidents, is (1-p)^13 = .99987
(For some real hair-raising fun, try this calculation with the success/failure rate of a typical condom.)
Note that this is a purely frequentist interpretation and ignores any Bayesian inference (ie, we assigning a weight of 0 to our Bayesian prior, which is atypical). It's not a very robust way of modeling the situation, for a number of reasons.
Assuming I interpret the actual problem at hand correctly, this is how we formulate it statistically.
We have an event that occurs with probability p = 1/1000000, given an accident (of which there were 13).
The probability of having zero catastrophic events, given that we have observed 13 accidents, is (1-p)^13 = .99987
(For some real hair-raising fun, try this calculation with the success/failure rate of a typical condom.)
Note that this is a purely frequentist interpretation and ignores any Bayesian inference (ie, we assigning a weight of 0 to our Bayesian prior, which is atypical). It's not a very robust way of modeling the situation, for a number of reasons.