Empirical probability versus Theoretical probability
Empirical probability refers to the relative frequency of a certain outcome in an actual experimental setting. Thus empirical probability is also referred to as experimental probability (Creswell, 2009). Theoretical probability on the other hand is concerned with the analysis of random phenomena (Hughes & Sharrock, 2007).
Both concepts find various applications in the sciences and social studies. Experimental probability is, for example, used in electrical engineering. An electrical engineer who builds quantum-cascade lasers and tests them in experiments would be interested in finding out, what the probability is that the semi-conductor lasers he/she builds lasers at a certain frequency. Other examples include such diverse fields as medical research, or sociology, psychology and political science, in which experiments are conducted and quantitative research methods are being used.
Theoretical probability is widely used in statistics. One example of the application of this concept is the insurance industry, which, based on certain variables such as age, gender, and even the brand of the car one drives, conducts calculations on the probability that a specific person has a car accident. Based on this the insurance premium is determined. Other examples of the use of theoretical probability can be found in the finance sector or game theory.
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