How to Assign Probabilities?Probability is an instrument to measure the likelihood of the occurrence of an event. There are five major approaches of assigning probability: Classical Approach, Relative Frequency Approach, Subjective Approach, Anchoring, and the Delphi Technique: 1.Classical Approach: Classical probability is predicated on the condition that the outcomes of an experiment are equally likely to happen. The classical probability utilizes the idea that the lack of knowledge implies that all possibilities are equally likely. The classical probability is applied when the events have the same chance of occurring (called equally likely events), and the sets of events are mutually exclusive and collectively exhaustive. The classical probability is defined as: P(X) = Number of favorable outcomes / Total number of possible outcomes2.Relative Frequency Approach: Relative probability is based on accumulated historical or experimental data. Frequency-based probability is defined as:
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