Based on my experience in this class so far, I calculate the probability of my achieving an A grade to be 39%. I have arrived at this result by taking into account my grades so far while also bearing in mind that I am constantly learning and developing my skills and knowledge, therefore meaning that I have more chance of getting an A in the future than I have in the past. At the beginning of the class I didn’t know as much and wasn’t as familiar with what was required of me, and therefore it was much more difficult for me to achieve an A grade.
Not all students will arrive at the same probability assessment as I have. In fact, I predict that most students will have unique scores. This is because each person has had a separate experience of the class and will have had a different combination of grades up to this point. Furthermore, some students may think it unlikely that their grades will improve as the year goes on whereas others, like myself, will expect their grades to rise as they become more knowledgeable about the subject.
According to Investopedia (2011), the definition of subjective probability is: “A probability derived from an individual's personal judgment about whether a specific outcome is likely to occur. Subjective probabilities contain no formal calculations and only reflect the subject's opinions and past experience.”
Subjective probability can be very useful when making business predictions. Assessing the chances of recession is a solid example of when subjective probability can be used effectively (Lahiri & Wang, 2006). As predicting if and when a recession will happen is complex, working out a probability can be done by analysing what has happened in the individual’s past experience and on what they think is likely to happen in the future.
Most people make subjective probability assessments regularly in everyday life, for example in predicting the weather (Bar-Hillel). I used it in this way only this morning, when I looked at the sky and said to my friend that it was very likely to rain today. I had no statistical or scientific evidence that it is was going to rain. I was basing my calculation on my past experience of seeing the sky coloured in the same way as it was this morning and the fact that, on previous occasions of the sky looking that way, it had indeed rained that same day.
A second common example of the use of subjective probability is when betting on a horse race (Problem Gambling, 2011). If, in the future, I choose to bet on horses, my decision on which horse to back will rely on two factors. Firstly, I will look at the odds which, in themselves, are subjective analyses by experts in horse racing. Secondly, I will choose the horse based on my past experience of watching that horse run and making a prediction that the horse is likely to do well again. There is no guarantee that the horse will not stumble and come in last but, based on my past experience and on what I think is likely to happen, I would be making a subjective probability assessment.
References
Bar-Hillel, H. Subjective Probability Judgements. Retrieved from
http://www.ratio.huji.ac.il/dp_files/dp229.pdf
Investopedia (2011). Subjective Probability. Retrieved from
http://www.investopedia.com/terms/s/subjective_probability.asp#axzz1jZAiItnZ
Lahiri, J &Wang, G. Subjective probability forecasts for recessions: evaluation and
guidelines for use. Find Articles. Retrieved from
http://findarticles.com/p/articles/mi_m1094/is_2_41/ai_n16675906/
Problem Gambling (2011). Games of Subjective Probability. Retrieved from
http://www.problemgambling.ca/EN/ResourcesForProfessionals/Pages/GamesofSubje
ctiveProbability.aspx
