--- Wally Knox <[email protected]> wrote:
> I would like to calculate the probability distribution of the
> cumulative outcomes of independent events each of which has
> a different value and a different probability. For instance, take
> three events. Event One has a probability of .9 and would
> contribute 12 to the overall outcome. Event Two has a probability
> of .5 and would contribute 2 to the overall outcome. Event Three
> has a probability of .2 and would contribute 6 to the overall
> outcome.
<snip>
> I am told that to obtain the likely outcome of the events to multiply
> their individual probabilities by their individual values and sum the
> results.
The probability distribution will give you the probability of each
possible outcome, so in that case you need to multiply the
probabilities and not the probabilities with the outcomes. The
computation someone else told you to do will not give you the
probability distribution but the expected value.
There is thus no need to use Stata for computing this probability
distribution, but you can us Stata as a calculator. In the example
below I use the fact that Stata sees the value 0 as false and 1 as
true, for more on this trick see:
http://www.stata.com/support/faqs/data/trueorfalse.html .
*--------------------- begin example --------------
matrix res = J(8,5,.)
matrix colnames res = event_1 event_2 event3 Prob y
local i = 1
forvalues e1 = 0/1 {
forvalues e2 = 0/1 {
forvalues e3 = 0/1 {
local p = cond(`e1', .9, .1) * ///
cond(`e2', .5, .5) * ///
cond(`e3', .2, .8)
local y = cond(`e1', 12, 0) + ///
cond(`e2', 2, 0) + ///
cond(`e3', 6, 0)
matrix res[`i',1] = ///
`e1', `e2', `e3', ///
`p', `y'
local `i++'
}
}
}
matrix list res
*--------------------- end example ------------------
(For more on how to use examples I sent to the Statalist, see
http://home.fsw.vu.nl/m.buis/stata/exampleFAQ.html )
Hope this helps,
Maarten
-----------------------------------------
Maarten L. Buis
Department of Social Research Methodology
Vrije Universiteit Amsterdam
Boelelaan 1081
1081 HV Amsterdam
The Netherlands
visiting address:
Buitenveldertselaan 3 (Metropolitan), room N515
+31 20 5986715
http://home.fsw.vu.nl/m.buis/
-----------------------------------------
*
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