Hello, fellow CFA charters or actuaries. Ronda's mom's comment in UFC 190 Vlog Epi 3 really bugs me.
She said.
Now there are three possibility in each second, Ronda wins, Ronda loses or proceed to the next second. Therefore this is basically a Trinomial Option Pricing Model, right?
She implied that the probability of an opponent winning in a 60 second is six times greater than an opponent winning in 10 seconds, that must mean the probability is additive, which is erroneous.
A simpler example, say Bethe has 1 in 1000 chance of winning per second, if it's additive, than that means after 1000 seconds, the Bethe has a 100% chance of winning. Which is not true.
If you do a two step trinomial model starting from the 10th second of round 1, which we denote as t_0, and for the sake of easier of calculation, let Ronda chance of winning per second be 3/10, Bethe winning = 1/10 and proceeding to the next second be 6/10.
probability at t_1, or 1 second after t_0, is 3/10 for Ronda (R), 6/10 going into next second (N) and 1/10 for Bethe (B). Or mathematically, P(R)_1 = 0.3, P(N)_1 = 0.7 and P(B)_1 = 0.1
At t_2, which means they have to go through the previous second, which had a 0.6 probability, therefore P(R)_2 = 0.3 * 0.6 = 0.18, P(N)_2 = 0.6^2 = 0.36 and P(B)_2 = 0.1 * 0.6 = 0.06
etc
At each second, the probability of Ronda beating Bethe is always the same,
At the 60th second, or t_50, Bethe's chance is 0.1 * 0.6^49 = 1.34714 E-12, the cumulative chance from t_1 to t_50 and to the of the match is 0.25 via a KO, TKO or submission for Bethe. 0.25 is not 50 times bigger than 0.1.
I mean she's got a PhD and an expert in SAS apparently, how can she make up statistically incorrect statement?
She said.
"Even if someone has a one in a million chance per second of beating you, if you let it go 60 seconds where you could have done it in ten, you give them six times the chance, that's just stupid"
Now there are three possibility in each second, Ronda wins, Ronda loses or proceed to the next second. Therefore this is basically a Trinomial Option Pricing Model, right?
She implied that the probability of an opponent winning in a 60 second is six times greater than an opponent winning in 10 seconds, that must mean the probability is additive, which is erroneous.
A simpler example, say Bethe has 1 in 1000 chance of winning per second, if it's additive, than that means after 1000 seconds, the Bethe has a 100% chance of winning. Which is not true.
If you do a two step trinomial model starting from the 10th second of round 1, which we denote as t_0, and for the sake of easier of calculation, let Ronda chance of winning per second be 3/10, Bethe winning = 1/10 and proceeding to the next second be 6/10.
probability at t_1, or 1 second after t_0, is 3/10 for Ronda (R), 6/10 going into next second (N) and 1/10 for Bethe (B). Or mathematically, P(R)_1 = 0.3, P(N)_1 = 0.7 and P(B)_1 = 0.1
At t_2, which means they have to go through the previous second, which had a 0.6 probability, therefore P(R)_2 = 0.3 * 0.6 = 0.18, P(N)_2 = 0.6^2 = 0.36 and P(B)_2 = 0.1 * 0.6 = 0.06
etc
At each second, the probability of Ronda beating Bethe is always the same,
At the 60th second, or t_50, Bethe's chance is 0.1 * 0.6^49 = 1.34714 E-12, the cumulative chance from t_1 to t_50 and to the of the match is 0.25 via a KO, TKO or submission for Bethe. 0.25 is not 50 times bigger than 0.1.
I mean she's got a PhD and an expert in SAS apparently, how can she make up statistically incorrect statement?