# 24_OverheadsForChen0 - Objectivesfortoday Introduction How...

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ACCY 302 (Chen) Fall 2009, Class 24 1 Objectives for today Introduction How stats help decision-making Review and application of basic stats probability sampling issues measures of association measures of central tendency confidence intervals comparing means measures of variation

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ACCY 302 (Chen) Fall 2009, Class 24 2 How stats help decision-making We know that when making decisions: we try to simplify the task we don't always have the information needed to make "good" estimates we don't bother to look for more information to disprove our initial estimates we can get emotionally caught up in the decision so we need to use tools that can help us make "good" decisions
ACCY 302 (Chen) Fall 2009, Class 24 3 How stats help. .. (continued) We can use statistics to: make inferences about some characteristics of an entire population. .. ...based on information contained in a random sample from that population ...which helps us make "good" decisions in the face of uncertainty or at least defensible decisions, which is often more important!

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ACCY 302 (Chen) Fall 2009, Class 24 4 Dilbert Cartoon of the Day
ACCY 302 (Chen) Fall 2009, Class 24 5 Caution on implying causality The existence of a statistical relationship does not automatically imply that a causal relationship exists! Example: Assume that in a sample of men, you find a positive statistical relationship between weight and height

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ACCY 302 (Chen) Fall 2009, Class 24 6 Caution on implying causality   (continued) Example: (continued) You could develop formulas to do each of the following: a) predict a man's weight based on his height b) predict a man's height based on his weight But these formulas say different things. Which makes more sense? a) Max is heavy because he is tall . b) Max is tall because he is heavy .
ACCY 302 (Chen) Fall 2009, Class 24 7 Caution on implying causality  (continued) from Merriam-Webster: cause - what makes something happen; something that or somebody who makes something happen or exist or is responsible for a certain result effect – something that inevitably follows an antecedent (as a cause or agent) there's a notion of time here, and we can SOMETIMES use intuition and/or statistical analyses to ascertain the direction of a relationship

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ACCY 302 (Chen) Fall 2009, Class 24 8 Correlation between Skirt Length and Stock  Market
ACCY 302 (Chen) Fall 2009, Class 24 9 Probability Probability: the likelihood (i.e., chance) of occurrence of an event for event A, this is denoted P(A) ranges from 0 through 1 Probability distribution: an exhaustive list of all events that can result from a chance process and the probability associated with each of those events

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ACCY 302 (Chen) Fall 2009, Class 24 10 Probability  (continued) Probability types: marginal probability of an event A i occurring across all conditions of event B (or vice versa) joint probability of two events occurring together denoted P(A,B) or P(A B)
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