Importance of the Concept of Probability

Since its humble beginning at the gambling tables in seventeenth century, probability theory has been developed and employed to treat and solve many weighty problems. It is the foundation of the classical decision procedures of estimation and testing. Probability models can be very useful for making predictions. It is concerned with the construction of econometric models, with managerial decisions on planning and control, with the occurrence of accidents of all kinds and with random disturbances in an electrical mechanism. It is involved in the observation of the life span of a radioactive atom, of the phenotypes of the offspring, the crossing of two species of plants, the discussion about sex of an unborn baby, etc. In fact, it has become an indispensable tool for all types of formal studies that involve uncertainty. It should be noted that the concept of probability is employed not only for various types of scientific investigations, but also for many problems in everyday life. It will not be an exaggeration to say that probability has become a part of our everyday life whether or not we admit or are conscious of the use of something so sophisticated. It is still a dream to forecast the future with 100 percent certainty in any decisions problem. The probability theory provides a media of coping up with uncertainty.

Highlighting the importance of probability theory, has beautifully pointed out that statistics, as a method of descions-making under uncertainty, is founded on probability theory, since probability is at once the language and the measures of uncertainty and the risks associated with it. Before learning statistical decisional procedures, the reader must acquire an understanding of probability theory.

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