Research Design

Probability and Decision Making

Joshua A

QNT/561

November 8, 2010

Anthony Matias

Probability and Decision Making

In this paper, I will discuss researching statistical data within a business context that requires a decision to be made. Then, I will discuss the use of probability on the researched data to formulate a decision. I will also explain the research methods and the process for limiting the uncertainty in the decision through identifying each outcome from my statistical analysis, and providing rationale for each one.

First, what is probability and how can it help us make a decision? According to stattrek.com, probability is defined as follows: The probability of an event is a measure of the likelihood that the event will occur. Statisticians have agreed on the following rules and conventions.

• The probability of any event can range from 0 to 1.

• The sum of probabilities of all sample points in a sample space is equal to 1.

• The probability of event A is the sum of the probabilities of all the sample points in event A.

• The probability of event A is denoted by P(A).

Thus, if event A were very unlikely to occur, then P(A) would be close to 0. And if event A were very likely to occur, then P(A) would be close to 1.

I will research statistical data regarding being able to correctly guess the right answer on a multiple choice final exam. The decisions that I will be confronted with is whether to guess the answers for the exam and not worry about studying, and by that risk failing the exam, or decide to put in the necessary time and effort to study appropriately for the exam in order to achieve a passing grade. I will be relying on the following assumption in regards to the results of the test via studying: I have passed all previous exams within this program of study with a minimum of 75%. I will be calculating the probability of each success.

The method in which I will be using to...