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Statistics Lectures Slides, 2.4 Random Variables

This document provides an overview of random variables including: - Random variables represent numeric quantities whose values depend on random events and are denoted by capital letters like X. - There are discrete and continuous random variables. Discrete variables take integer values while continuous variables take real values. - The expected value (mean) provides the average outcome of a random variable and is a weighted average of possible outcomes. - Variability measures how much values of a random variable vary from the expected value. - Linear combinations of random variables follow rules like E(aX + bY) = aE(X) + bE(Y) but Var(aX + bY) ≠ aVar(X) +

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58 views

Statistics Lectures Slides, 2.4 Random Variables

This document provides an overview of random variables including: - Random variables represent numeric quantities whose values depend on random events and are denoted by capital letters like X. - There are discrete and continuous random variables. Discrete variables take integer values while continuous variables take real values. - The expected value (mean) provides the average outcome of a random variable and is a weighted average of possible outcomes. - Variability measures how much values of a random variable vary from the expected value. - Linear combinations of random variables follow rules like E(aX + bY) = aE(X) + bE(Y) but Var(aX + bY) ≠ aVar(X) +

Uploaded by

Ramiz Iqbal
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Random Variables

Slides developed by Mine Çetinkaya-Rundel of OpenIntro


The slides may be copied, edited, and/or shared via the CC BY-SA license
Some images may be included under fair use guidelines (educational purposes)
Random variables
A random variable is a numeric quantity whose value depends on the
outcome of a random event
● We use a capital letter, like X, to denote a random variable
● The values of a random variable are denoted with a lowercase
letter, in this case x
● For example, P(X = x)

There are two types of random variables:


● Discrete random variables often take only integer values
○ Example: Number of credit hours, Difference in number of
credit hours this term vs last
● Continuous random variables take real (decimal) values
○ Example: Cost of books this term, Difference in cost of books
this term vs last
Expectation
● We are often interested in the average outcome of a random
variable.
● We call this the expected value (mean), and it is a weighted
average of the possible outcomes
Expected value
of a discrete random variable
In a game of cards you win $1 if you draw a heart, $5 if you draw
an ace (including the ace of hearts), $10 if you draw the king of
spades and nothing for any other card you draw. Write the
probability model for your winnings, and calculate your expected
winning.
Expected value
of a discrete random variable (cont.)
Below is a visual representation of the probability distribution of
winnings from this game:
Variability
We are also often interested in the variability in the values of a
random variable.
Variability of
a discrete random variable
For the previous card game example, how much would you
expect the winnings to vary from game to game?
Linear combinations
A linear combination of random variables X and Y is given by

aX + bY

where a and b are some fixed numbers.

The average value of a linear combination of random variables


is given by

E(aX + bY) = a x E(X) + b x E(Y)


Calculating the expectation
of a linear combination
On average you take 10 minutes for each statistics homework
problem and 15 minutes for each chemistry homework problem.
This week you have 5 statistics and 4 chemistry homework
problems assigned. What is the total time you expect to spend on
statistics and physics homework for the week?
Linear combinations
The standard deviation of the time you take for each statistics
homework problem is 1.5 minutes, and it is 2 minutes for each
chemistry problem. What is the standard deviation of the time
you expect to spend on statistics and physics homework for the
week if you have 5 statistics and 4 chemistry homework
problems assigned?
Practice
A casino game costs $5 to play. If you draw first a red card, then
you get to draw a second card. If the second card is the ace of
hearts, you win $500. If not, you don't win anything, i.e. lose your
$5. What is your expected profits (or losses) from playing this
game? Remember: profit (or loss) = winnings - cost.

(a) a loss of 10¢ (c) a loss of 30¢

(b) a loss of 25¢ (d) a profit of 5¢


Practice
A casino game costs $5 to play. If you draw first a red card, then
you get to draw a second card. If the second card is the ace of
hearts, you win $500. If not, you don't win anything, i.e. lose your
$5. What is your expected profits (or losses) from playing this
game? Remember: profit (or loss) = winnings - cost.

(a) a loss of 10¢ (c) a loss of 30¢

(b) a loss of 25¢ (d) a profit of 5¢


Fair game
A fair game is defined as a game that costs as much as its
expected payout, i.e. expected profit is 0.

Do you think casino games in Vegas cost more or less than their
expected payouts?

If those games cost less than their


expected payouts, it would mean
that the casinos would be losing
money on average, and hence they
wouldn't be able to pay for all this:

Image by Moyan_Brenn on Flickr


http://www.flickr.com/photos/aigle_dore/5951714693
Simplifying random variables
Random variables do not work like normal algebraic variables:
X + X ≠ 2X

E(X + X) = E(X) + E(X) V(X + X) = Var(X) + Var(X)


= 2E(X) = 2 Var(X)

E(2X) = 2E(X) Var(2X) = 22 Var(X)


= 4 Var(X)

E(X + X) = E(2X), but Var(X + X) ≠ Var(2X)


Adding or multiplying?
A company has 5 Lincoln Town Cars in its fleet. Historical data show
that annual maintenance cost for each car is on average $2,154 with a
standard deviation of $132. What is the mean and the standard
deviation of the total annual maintenance cost for this fleet?

Note that we have 5 cars each with the given annual maintenance cost
(X1 + X2 + X3 + X4 + X5), not one car that had 5 times the given annual
maintenance cost (5X).

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