What is Subjective Probability?
The possibility of something occurring solely from one person's perspective or opinion is referred to as Subjective Probability. It varies from individual to individual and is not dependent on market knowledge or previous facts. Furthermore, it is predicated on a person's individual viewpoint rather than on facts.
Understanding of Subjective Probability
The probability theory is based on the assumption that an occurrence is more likely to happen when certain elements are present. It also includes the probability of a particular situation as a result of the event happening. In most cases, a statistical method is used to calculate the probability of an outcome. Subjective probability is a sort of chance that is based on human perceptions of the possibility of an incident. As a result, subjective probability can be influenced by human preferences and opinions. Individual backgrounds, situations, religious views, and a number of other factors can influence subjective probability.
Because individuals may have a distinct viewpoint or set of ideas about a certain scenario, the subjective probability conclusion will not be the same between multiple individuals. The subjective probability technique is utilized for decision-making in a variety of fields including sales, economy, and management. For instance, a marketing manager may estimate that his firm has an 80% probability of winning the contract he has negotiated. This proportion cannot be determined by multiple trials or equations.
Practical Example
Jacob just finished an interview for a post as a brand manager, and he seeks to guess the result. He didn't have any statistical evidence to establish the chance that he'll get the job. So, he made a forecast based on subjective probability. He projects a 90% probability of getting the job based on his concepts and background, because he met people at the organization, heard about how he could progress in the business, and got a follow-up message, all of which are indications of a great interview.
In Sentences
- Subjective probability is used to determine the probability of an event happening based on an individual's perception or instinct.