Thursday, January 16, 2003

A few great probability problems from today's homework: 1.  The Birthday Quiz.  What is the chance that a randomly selected group of 25 people share a birthday?  2.  The Monty Hall Quiz.  Monty Hall (a game show host) offers you three boxes.  In one lies a car, and in the other two you'll find a lovely goat.  You pick a box, but instead of opening it up, Monty opens another box, and it has a goat in it.  You now can change your box if you wish; should you? 3.  The Mutual Fund Scam.  Only 14 of 900 mutual fund managers were able to beat the S&P 500 average for six years.  Assuming that each mutual fund manager used a strategy of flipping a coin, where heads means "beat average" and tails "miss average", what is the probability of a fund manager having a perfect six-year record?  Based on this probability, how many of the 900 fund managers would you expect to beat the S&P?   Answers: 1. better than 50% 2.  you should change boxes, improving your chance of winning the car from 1/3 to 2/3 3.  chance of beating the S&P six times: 1.6%.  Number of funds expected to do so: 14   7:19:42 PM    comment []

Much to report today!  Today's classes were Applied Statistics and Financial Accounting. In AS, Professor Jack Soll continued to impress the class with his wit and clarity.  He has a very good way of explaining concepts to business school students, but I might be biased, as this is not a quantitative crowd (ie. statistically naïve) .  For example, he asked how many people thought that two people shared a birthday in our class of 78 students.  Only 8 people thought there was a good (>75%) chance of this happening, which is astounding.  I guessed that the actual percentage chance was 98%, and it's actually 99.8%.  The "birthday game" is known to anyone who has taken introductory probability or statistics - there is 50% of a group sharing a birthday if there are 23 people in the group. I really like Professor Soll, and I would like to take his other classes on decision theory, so I will likely work diligently for this class. In Financial Accounting, I had my first experience with a subpar professor, who shall, for the time being, remain unnamed.  Let's just say that after class, about 50 emails were exchanged by our group, trying to decide what to do.  Options included speaking to him, signing a petition, and speaking to the administration; I will probably do all three myself.  Managing this situation will show a lot about what Insead is, and how it handles internal performance issues.  It will be interesting. My group had dinner together, except for one chap who was feeling ill.  It was really nice to have some time together, to get to know each other and a bit of their history.  We are six ambitions, self-starting people who are each too smart for their own good; put us all in a group without clear leadership, and you can see that we will be headed for some major Organizational Behavior issues.  We are on the right track, though, and while you cannot (and should not) avoid conflict, I hope that we can provide an environment in which conflict can be addressed and resolved constructively.  And in which we can all practice writing sentences like the preceding one, so we can get jobs in team performance management when we graduate. :-)   12:33:08 AM    comment []