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p. 575. Making sense of probabilitieslocked

  • John Haigh

Abstract

‘Making sense of probabilities’ shows how decisions can be made from correctly interpreting probabilities. Fair gambles are ones that give no advantage to either party. All commercial bets, however, suffer from house advantage. Assessing risk involves distinguishing between absolute and relative risks. Tiny probabilities can be combined using Borel–Cantelli Lemmas. These show that small risks will build until they are much larger, so safety standards must be continuously strengthened to prevent catastrophes. Many misconceptions cloud the public's understanding of probabilities. One important concept that will help people to assess probability and risk in everyday life is that of utility.

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