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# Review - Lily Qiu, Assistant Professor Brown University ---...

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Unformatted text preview: Lily Qiu, Assistant Professor Brown University --- Economics Department EC1710, Lecture 1, Spring 2009, page 1 Review of Statistical Concepts 1. Random variable : a number whose realization is not yet known Example: outcome of tossing a fair die ( d ~ ) Histogram for the outcome of a fair die: 1 2 3 4 5 6 Probability distribution for the outcome of a fair die: State probabilty outcome 1 1/6 1 2 1/6 2 3 1/6 3 4 1/6 4 5 1/6 5 6 1/6 6 Expected value : E( d ~ ) = (1/6)*1+(1/6)*2+(1/6)*3+(1/6)*4+(1/6)*5+(1/6)*6 = 3.5 Generalization: E( r ~ ) = Pr 1 r 1 + Pr 2 r 2 + Pr 3 r 3 + + Pr n r n = n s s s r 1 Pr Variance : a measure of the spread of the probability distribution 2 ( d ~ ) = (1/6)*(1-3.5) 2 + (1/6)*(2-3.5) 2 + (1/6)*(3-3.5) 2 + (1/6)*(4-3.5) 2 + (1/6)*(5-3.5) 2 + (1/6)*(6-3.5) 2 = 2.917 Lily Qiu, Assistant Professor Brown University --- Economics Department EC1710, Lecture 1, Spring 2009, page 2 Generalization : 2 ( r ~ ) = n s s s r E r 1 2 )) ~ ( ( Pr...
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## This note was uploaded on 07/21/2010 for the course ECON 1710 taught by Professor Qiu during the Spring '10 term at Brown.

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Review - Lily Qiu, Assistant Professor Brown University ---...

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