What Conditional probability is
Conditional probability is a measure of the probability of an event occurring given that another event has already occurred. It is calculated by taking the probability of the two events occurring together and dividing by the probability of the first event.
Steps for Calculating Conditional Probability:
- Identify the two events for which you are looking for the conditional probability.
- Calculate the probability of the two events occurring together.
- Calculate the probability of the first event occurring.
- Divide the probability of the two events occurring together by the probability of the first event.
- The result is the conditional probability.
Examples
- A doctor wants to estimate the probability that a patient has a certain disease given that they test positive for a certain biomarker.
- An insurance company wants to determine the probability of a customer filing a claim based on their age and driving history.
- An analyst wants to calculate the probability of a stock increasing in value given its current performance.