Probability - Revision history

Pesterbot: /* Links */External Links to Links, replaced: ==External links== → ==Links==

2011-06-21T19:12:31Z

Links: External Links to Links, replaced: ==External links== → ==Links==

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	{{Reflist}}		{{Reflist}}

	==~~External links~~==		==Links==
	* [[Wikipedia:Probability\|Probability]] on Wikipedia		* [[Wikipedia:Probability\|Probability]] on Wikipedia
	* [http://mises.org/journals/qjae/pdf/qjae10_1_1.pdf The limits of numerical probability: Frank H. Knight and Ludwig von Mises and the frequency interpretation] (pdf) by Hans-Hermann Hoppe		* [http://mises.org/journals/qjae/pdf/qjae10_1_1.pdf The limits of numerical probability: Frank H. Knight and Ludwig von Mises and the frequency interpretation] (pdf) by Hans-Hermann Hoppe

Pestergaines: +link

2011-02-17T15:36:05Z

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	Men try to forecast particular future event on the basis of their knowledge about the behavior of the class. A doctor may determine the chances for the full recovery of his patient if he knows that 70 per cent of those afflicted with the same disease recover. If he expresses his judgment correctly, he will not say more than that the probability of recovery is 0.7, that is, that out of ten patients not more than three on the average die. This is not a forecast, but a statement about the frequency of the various possible outcomes. All such predictions about external events, i.e., events in the field of the natural sciences, are of this character. They are based either on statistical information or simply on the rough estimate of the frequency derived from nonstatistical experience.		Men try to forecast particular future event on the basis of their knowledge about the behavior of the class. A doctor may determine the chances for the full recovery of his patient if he knows that 70 per cent of those afflicted with the same disease recover. If he expresses his judgment correctly, he will not say more than that the probability of recovery is 0.7, that is, that out of ten patients not more than three on the average die. This is not a forecast, but a statement about the frequency of the various possible outcomes. All such predictions about external events, i.e., events in the field of the natural sciences, are of this character. They are based either on statistical information or simply on the rough estimate of the frequency derived from nonstatistical experience.

	A surgeon tells a patient who considers submitting himself to an operation that thirty out of every hundred undergoing such an operation die. If the patient asks whether this number of deaths is already full, he has misunderstood the doctor's statement. He has fallen prey to the error known as the '''"gambler's fallacy"'''. Like the roulette player who concludes from a run of ten red in succession that the probability of the next turn being black is now greater than it was before the run, he confuses case probability with class probability.		A surgeon tells a patient who considers submitting himself to an operation that thirty out of every hundred undergoing such an operation die. If the patient asks whether this number of deaths is already full, he has misunderstood the doctor's statement. He has fallen prey to the error known as the '''"gambler's [[fallacy]]"'''. Like the roulette player who concludes from a run of ten red in succession that the probability of the next turn being black is now greater than it was before the run, he confuses case probability with class probability.

Pestergaines: /* External links */ +res

2011-01-26T23:03:40Z

External links: +res

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	* [http://mises.org/daily/4128 The Correct Theory of Probability], by Murray N. Rothbard		* [http://mises.org/daily/4128 The Correct Theory of Probability], by Murray N. Rothbard
	* [http://mises.org/daily/3605 What Is the Proper Way to Study Man?] by Murray N. Rothbard		* [http://mises.org/daily/3605 What Is the Proper Way to Study Man?] by Murray N. Rothbard
			* [http://mises.org/daily/4979 Why the Definition of Probability Matters] by Mark R. Crovelli, January 2011

	[[Category:Economic concepts]]		[[Category:Economic concepts]]

Crovelli at 16:23, 10 January 2011

2011-01-10T16:23:00Z

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	According to [[Murray N. Rothbard\|Rothbard]], it is not accurate to apply terms like "gambling" or "betting" to situations either of risk or of uncertainty. They refer to situations where new risks or uncertainties are created for the enjoyment of the uncertainties themselves. Gambling on the throw of the dice and betting on horse races are examples of the deliberate creation of new uncertainties which otherwise would not have existed. The entrepreneur is not creating uncertainties for the fun of it. On the contrary, he tries to reduce them as much as possible. The uncertainties he confronts are already inherent in the market situation, indeed in the nature of human action; someone must deal with them, and he is the most skilled or willing candidate. In the same way, an operator of a gambling establishment or of a race track is not creating new risks; he is neither a gambler or a bettor, he is an entrepreneur trying to judge the situation on the market.<ref name="Rothbard_probability" />		According to [[Murray N. Rothbard\|Rothbard]], it is not accurate to apply terms like "gambling" or "betting" to situations either of risk or of uncertainty. They refer to situations where new risks or uncertainties are created for the enjoyment of the uncertainties themselves. Gambling on the throw of the dice and betting on horse races are examples of the deliberate creation of new uncertainties which otherwise would not have existed. The entrepreneur is not creating uncertainties for the fun of it. On the contrary, he tries to reduce them as much as possible. The uncertainties he confronts are already inherent in the market situation, indeed in the nature of human action; someone must deal with them, and he is the most skilled or willing candidate. In the same way, an operator of a gambling establishment or of a race track is not creating new risks; he is neither a gambler or a bettor, he is an entrepreneur trying to judge the situation on the market.<ref name="Rothbard_probability" />

			==Subjective probability==
			The definition and theory of probability just outlined has been criticized by Mark Crovelli as inconsistent with the Austrian view of causality.<ref name="Crovelli_Probability1" /><ref name="Crovelli_Probability2" /> On the one hand, Crovelli has criticized [[Ludwig von Mises]] for both failing to define probability,<ref name="Crovelli_Probability2" /> and for making ad hoc use of his brother's, [[Richard von Mises]], "frequentist" definition of probability. Crovelli argues that if the world is governed by causal laws, as [[Ludwig von Mises]] himself claimed it was, then probability must be defined as a subjective measure of human uncertainty about the causal forces at work in the world.<ref name="Crovelli_Probability1" /> Crovelli claims that if probability is defined as a subjective measure of human uncertainty, then there exists no non-arbitrary reason to restrict its application to "class probability," as [[Ludwig von Mises]] claimed.<ref name="Crovelli_Probability1" />

	==References==		==References==

Crovelli at 16:06, 10 January 2011

2011-01-10T16:06:58Z

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	{{RightTOC}}A statement is '''probable''' if our knowledge about its content is deficient: we do not know everything needed for a definite decision between true and false. But, on the other hand, we do know ''something'' about it; we can say more than simply ''[[Wikipedia:Non liquet\|non liquet]]'' or ignoramus.		{{RightTOC}}A statement is '''probable''' if our knowledge about its content is deficient: we do not know everything needed for a definite decision between true and false. But, on the other hand, we do know ''something'' about it; we can say more than simply ''[[Wikipedia:Non liquet\|non liquet]]'' or ignoramus.

	~~All~~ human [[action]] has to deal with the uncertainty of the future. The distinction between "risk" and "uncertainty" has been developed by [[Wikipedia:Frank Knight\|Frank Knight]] and ~~deeper~~ analyzed by [[Ludwig von Mises]], who has shown that they can be subsumed under the more general categories of "class probability" and "case probability". ~~Only~~ class probability is subject to numerical expression and analysis.<ref name="Rothbard_probability">[[Murray N. Rothbard]]. [http://mises.org/rothbard/mes/chap8b.asp#9._Risk_Uncertainty_Insurance "9. Risk, Uncertainty, and Insurance"], [[Man, Economy and State]] online version, referenced 2009-10-24.</ref><ref name="Mises_Probability">[[Ludwig von Mises]]. [http://mises.org/humanaction/chap6sec2.asp "2. The Meaning of Probability"], [[Human Action]], online version, referenced 2009-10-22.</ref>		According to [[Ludwig von Mises]], all human [[action]] has to deal with the uncertainty of the future. The distinction between "risk" and "uncertainty" has been developed by [[Wikipedia:Frank Knight\|Frank Knight]] and has been more deeply analyzed by [[Ludwig von Mises]], who has shown that they can be subsumed under the more general categories of "class probability" and "case probability". According to Ludwig von Mises and Murray Rothbard, inter alia, only class probability is subject to numerical expression and analysis.<ref name="Rothbard_probability">[[Murray N. Rothbard]]. [http://mises.org/rothbard/mes/chap8b.asp#9._Risk_Uncertainty_Insurance "9. Risk, Uncertainty, and Insurance"], [[Man, Economy and State]] online version, referenced 2009-10-24.</ref><ref name="Mises_Probability">[[Ludwig von Mises]]. [http://mises.org/humanaction/chap6sec2.asp "2. The Meaning of Probability"], [[Human Action]], online version, referenced 2009-10-22.</ref> This claim has been challenged by Mark Crovelli, who has argued that probability is a subjective measure of uncertainty, and that numerical probability can therefore be legitimately applied to singular cases.<ref name="Crovelli_Probability1">Mark R. Crovelli. [http://libertarianpapers.org/2009/26-crovelli-on-the-possibility-of-assigning-probabilities-to-singular-cases/ "On The Possibility of Assigning Probabilities to Singular Cases, or: Probability is Subjective too!"], [[Libertarian Papers]] Volume 1,#26 (2009), referenced 2011-01-10.</ref>

	==Class probability==		==Class probability==
	'''Class probability''' means, that we know nothing about an individual outcome, but we know everything about a whole class of events, and are certain about the future. In a lottery, for example, we know how many tickets are in total and how many will be drawn. But that does not say at all, if a particular ticket or tickets will win, and buying more tickets does not increase the chance of winning. An instance of class probability is called '''risk'''. It is possible to [[Insurance\|insure]] against risk, because the behavior of a class of events (or a reasonable subset of it) is well known.<ref name="Mises_Class_Probability">[[Ludwig von Mises]]. [http://mises.org/humanaction/chap6sec3.asp "3. Class Probability"], [[Human Action]], online version, referenced 2009-10-10.</ref>		'''Class probability''' means, according to [[Ludwig von Mises]], that we know nothing about an individual outcome, but we know everything about a whole class of events, and are certain about the future. In a lottery, for example, we know how many tickets are in total and how many will be drawn. But that does not say at all, if a particular ticket or tickets will win, and buying more tickets does not increase the chance of winning. An instance of class probability is called '''risk'''. It is possible to [[Insurance\|insure]] against risk, because the behavior of a class of events (or a reasonable subset of it) is well known.<ref name="Mises_Class_Probability">[[Ludwig von Mises]]. [http://mises.org/humanaction/chap6sec3.asp "3. Class Probability"], [[Human Action]], online version, referenced 2009-10-10.</ref>

	The field for the application of class probability is the field of the natural sciences, ruled by [[Wikipedia:Causality\|causality]].<ref name="Mises_Probability" />		According to [[Ludwig von Mises]], The field for the application of class probability is the field of the natural sciences, ruled by [[Wikipedia:Causality\|causality]].<ref name="Mises_Probability" />

	===Risk and Insurance===		===Risk and Insurance===
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	'''Case probability''' means, that we know some of the factors which determine the outcome of a particular event; but there are other determining factors which we don't know. The cases are individual, unique, and nonrepeatable, their result is '''uncertain'''. If in roulette a ball falls ten times on red in succession, the probability, that in the next turn will be the result black, is not greater than it was before. Football games cannot be predicted on the results of last games, nor can be presidential elections.<ref name="Mises_Case_Probability">[[Ludwig von Mises]]. [http://mises.org/humanaction/chap6sec4.asp "4. Case Probability"], [[Human Action]], online version, referenced 2009-10-10.</ref>		'''Case probability''' means, that we know some of the factors which determine the outcome of a particular event; but there are other determining factors which we don't know. The cases are individual, unique, and nonrepeatable, their result is '''uncertain'''. If in roulette a ball falls ten times on red in succession, the probability, that in the next turn will be the result black, is not greater than it was before. Football games cannot be predicted on the results of last games, nor can be presidential elections.<ref name="Mises_Case_Probability">[[Ludwig von Mises]]. [http://mises.org/humanaction/chap6sec4.asp "4. Case Probability"], [[Human Action]], online version, referenced 2009-10-10.</ref>

	~~The~~ field for the application of case probability is the field of the sciences of human action, ruled by [[Wikipedia:Teleology\|teleology]].<ref name="Mises_Probability" /> It is not subject to numerical expression and analysis.<ref name="Rothbard_probability" />		According to [[Ludwig von Mises]], the field for the application of case probability is the field of the sciences of human action, ruled by [[Wikipedia:Teleology\|teleology]].<ref name="Mises_Probability" /> It is not subject to numerical expression and analysis.<ref name="Rothbard_probability" /> This claim has also been challenged by Mark Crovelli, who has argued that Ludwig von Mises's distinction between "class" and "case" probability is artificial and trivial if one defines probability subjectively <ref name="Crovelli_Probability2">Mark R. Crovelli. [http://libertarianpapers.org/2010/23-crovelli-a-challenge-to-mises-theory-of-probability/ "A Challenge to Ludwig von Mises's Theory of Probability"], [[Libertarian Papers]] Volume 2, #23 (2010), referenced 2011-01-10.</ref>

	{{See also\|Uncertainty}}		{{See also\|Uncertainty}}
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	With '''case probability''', any reference to frequency is inappropriate, because the statements always deal with unique events, which are not members of any class. We can form a class of "American presidential elections". It may prove useful or even necessary for various kinds of reasoning. But if we are dealing with the election of, say, 1944, or 2008, we are grappling with an individual, unique, and nonrepeatable case. The case is characterized by its unique merits, it is a class by itself. All the marks which make it permissible to subsume it under any class are irrelevant for the problem in question.		With '''case probability''', any reference to frequency is inappropriate, according to [[Ludwig von Mises]] because the statements always deal with unique events, which are not members of any class. We can form a class of "American presidential elections". It may prove useful or even necessary for various kinds of reasoning. But if we are dealing with the election of, say, 1944, or 2008, we are grappling with an individual, unique, and nonrepeatable case. The case is characterized by its unique merits, it is a class by itself. All the marks which make it permissible to subsume it under any class are irrelevant for the problem in question.

	Two football teams, the Blues and the Yellows, will play tomorrow. In the past the Blues have always defeated the Yellows. This knowledge is not knowledge about a class of events. If it was, we would have to conclude that the Blues are always victorious and that the Yellows are always defeated. We would not be uncertain of the outcome of the game, we would know that the Blues will win again. If, on the other hand, we would fall to the "gambler's fallacy," we would argue that tomorrow's game will result in the success of the Yellows.<ref name="Mises_Case_Probability" />		Two football teams, the Blues and the Yellows, will play tomorrow. In the past the Blues have always defeated the Yellows. This knowledge is not knowledge about a class of events. If it was, we would have to conclude that the Blues are always victorious and that the Yellows are always defeated. We would not be uncertain of the outcome of the game, we would know that the Blues will win again. If, on the other hand, we would fall to the "gambler's fallacy," we would argue that tomorrow's game will result in the success of the Yellows.<ref name="Mises_Case_Probability" />

Forgottenman: /* External links */Category:Economical Concepts --> Category:Economic concepts using AWB

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External links: Category:Economical Concepts --> Category:Economic concepts using AWB

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	* [http://mises.org/daily/4128 The Correct Theory of Probability], by Murray N. Rothbard		* [http://mises.org/daily/4128 The Correct Theory of Probability], by Murray N. Rothbard
	* [http://mises.org/daily/3605 What Is the Proper Way to Study Man?] by Murray N. Rothbard		* [http://mises.org/daily/3605 What Is the Proper Way to Study Man?] by Murray N. Rothbard
	[[Category:~~Economical Concepts~~]]		[[Category:Economic concepts]]

Pestergaines: 8 revisions: Importing pages from Autrian Economics Wiki.

2010-11-06T12:38:15Z

8 revisions: Importing pages from Autrian Economics Wiki.

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0.0.0.0 at 21:27, 13 August 2010

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	A statement is '''probable''' if our knowledge about its content is deficient: we do not know everything needed for a definite decision between true and false. But, on the other hand, we do know ''something'' about it; we can say more than simply ''[[Wikipedia:Non liquet\|non liquet]]'' or ignoramus.		{{RightTOC}}A statement is '''probable''' if our knowledge about its content is deficient: we do not know everything needed for a definite decision between true and false. But, on the other hand, we do know ''something'' about it; we can say more than simply ''[[Wikipedia:Non liquet\|non liquet]]'' or ignoramus.

	All human [[action]] has to deal with the uncertainty of the future. The distinction between "risk" and "uncertainty" has been developed by [[Wikipedia:Frank Knight\|Frank Knight]] and deeper analyzed by [[Ludwig von Mises]], who has shown that they can be subsumed under the more general categories of "class probability" and "case probability". Only class probability is subject to numerical expression and analysis.<ref name="Rothbard_probability">[[Murray N. Rothbard]]. [http://mises.org/rothbard/mes/chap8b.asp#9._Risk_Uncertainty_Insurance "9. Risk, Uncertainty, and Insurance"], [[Man, Economy and State]] online version, referenced 2009-10-24.</ref><ref name="Mises_Probability">[[Ludwig von Mises]]. [http://mises.org/humanaction/chap6sec2.asp "2. The Meaning of Probability"], [[Human Action]], online version, referenced 2009-10-22.</ref>		All human [[action]] has to deal with the uncertainty of the future. The distinction between "risk" and "uncertainty" has been developed by [[Wikipedia:Frank Knight\|Frank Knight]] and deeper analyzed by [[Ludwig von Mises]], who has shown that they can be subsumed under the more general categories of "class probability" and "case probability". Only class probability is subject to numerical expression and analysis.<ref name="Rothbard_probability">[[Murray N. Rothbard]]. [http://mises.org/rothbard/mes/chap8b.asp#9._Risk_Uncertainty_Insurance "9. Risk, Uncertainty, and Insurance"], [[Man, Economy and State]] online version, referenced 2009-10-24.</ref><ref name="Mises_Probability">[[Ludwig von Mises]]. [http://mises.org/humanaction/chap6sec2.asp "2. The Meaning of Probability"], [[Human Action]], online version, referenced 2009-10-22.</ref>

Pestergaines: Resource added.

2010-02-22T19:35:11Z

Resource added.

← Older revision		Revision as of 19:35, 22 February 2010
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	* [[Wikipedia:Probability\|Probability]] on Wikipedia		* [[Wikipedia:Probability\|Probability]] on Wikipedia
	* [http://mises.org/journals/qjae/pdf/qjae10_1_1.pdf The limits of numerical probability: Frank H. Knight and Ludwig von Mises and the frequency interpretation] (pdf) by Hans-Hermann Hoppe		* [http://mises.org/journals/qjae/pdf/qjae10_1_1.pdf The limits of numerical probability: Frank H. Knight and Ludwig von Mises and the frequency interpretation] (pdf) by Hans-Hermann Hoppe
	* [http://mises.org/story/3779 Risk, Uncertainty, and Economic Organization] by Peter G. Klein		* [http://mises.org/story/3779 Risk, Uncertainty, and Economic Organization] by Peter G. Klein
			* [http://mises.org/daily/4128 The Correct Theory of Probability], by Murray N. Rothbard
			* [http://mises.org/daily/3605 What Is the Proper Way to Study Man?] by Murray N. Rothbard
	[[Category:Economical Concepts]]		[[Category:Economical Concepts]]

Pestergaines: Added resource.

2009-12-04T15:22:24Z

Added resource.

← Older revision		Revision as of 15:22, 4 December 2009
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	* [[Wikipedia:Probability\|Probability]] on Wikipedia		* [[Wikipedia:Probability\|Probability]] on Wikipedia
	* [http://mises.org/journals/qjae/pdf/qjae10_1_1.pdf The limits of numerical probability: Frank H. Knight and Ludwig von Mises and the frequency interpretation] (pdf) by Hans-Hermann Hoppe		* [http://mises.org/journals/qjae/pdf/qjae10_1_1.pdf The limits of numerical probability: Frank H. Knight and Ludwig von Mises and the frequency interpretation] (pdf) by Hans-Hermann Hoppe
			* [http://mises.org/story/3779 Risk, Uncertainty, and Economic Organization] by Peter G. Klein
	[[Category:Economical Concepts]]		[[Category:Economical Concepts]]