Interpretations of Probability
1. Frequentist
Probability is the long-run relative frequency of an event occurring in repeated trials.
2. Subjective (Bayesian)
Probability is a degree of belief or certainty about an event, which can be updated as new information arrives.
Test Your Knowledge
Example: Frequentist vs. Bayesian
A factory machine produces defective parts 5% of the time. You draw a part at random. Explain how a Frequentist and a Bayesian would interpret the statement "There is a 5% probability this part is defective."
View Step-by-Step Solution
Frequentist Interpretation: If we were to draw millions of parts from this machine over a very long period of time, exactly 5% of them would be defective. The probability is a fixed property of the machine.
Bayesian Interpretation: Before testing the specific part you are holding, your personal degree of belief that it is defective is 5%. Once you inspect it, that probability updates to either 100% (it is defective) or 0% (it is not).