law of large numbers
Samples approach truth
The law of large numbers is a principle in probability theory: as a sample size grows, the average of results approaches the expected value.
Flip a coin ten times and you might get seven heads; flip it ten thousand times and you'll approach fifty percent.
The principle underlies insurance, polling, and casino profitability—individual outcomes are unpredictable, but aggregates converge toward mathematical expectation.
Average, or spiteful
- expected valueProbability-weighted outcome average
- sample sizeQuantity of observations taken
- convergenceProcess of approaching sameness
- varianceSpread around the mean
standard deviation · probability · distribution · population · random sample · frequency · empirical · data set
Resistance to displacement
- equilibriumState of balance
- consistencyReliable adherence to standards
- regularityConsistent, predictable occurrence
- predictabilityCapacity to be anticipated
steadiness · reliability · averaging out · tendency · uniformity · regression · normalization
Facility for wagering
- house edgeCasino's statistical advantage
- oddsLikelihood expressed numerically
- rouletteSpinning wheel wager
- blackjackCard game to twenty-one
poker · bankroll · expected return · long run · winning percentage · betting strategy · card counting · gambler's fallacy
Financial risk analyst
- premiumsPayments for insurance coverage
- underwritingRisk evaluation and acceptance
- claimsStatements of truth
- policyholderOwner of insurance contract
reinsurance · reserves · risk assessment · coverage · indemnity · solvency · annuities · actuarial tables
Prediction of future conditions
- estimationApproximate value judgment
- projectionSomething that extends outward
- extrapolationExtending data beyond bounds
- trendDirection of change
reliability · polling · confidence interval · margin of error · predictability · consistency · averaging · approximation
mean
Average, or spiteful
- expected valueProbability-weighted outcome average
- sample sizeQuantity of observations taken
- convergenceProcess of approaching sameness
variance · standard deviation · probability · distribution · population · random sample · frequency · empirical · data set · statistical analysis
stability
Resistance to displacement
- equilibriumState of balance
- consistencyReliable adherence to standards
- regularityConsistent, predictable occurrence
predictability · steadiness · reliability · averaging out · tendency · uniformity · regression · normalization
casino
Facility for wagering
- house edgeCasino's statistical advantage
- oddsLikelihood expressed numerically
- rouletteSpinning wheel wager
blackjack · poker · bankroll · expected return · long run · winning percentage · betting strategy · card counting · gambler's fallacy · payouts
actuary
Financial risk analyst
- premiumsPayments for insurance coverage
- underwritingRisk evaluation and acceptance
- claimsStatements of truth
policyholder · reinsurance · reserves · risk assessment · coverage · indemnity · solvency · annuities · actuarial tables · insurable interest
forecast
Prediction of future conditions
- estimationApproximate value judgment
- projectionSomething that extends outward
- extrapolationExtending data beyond bounds
trend · reliability · polling · confidence interval · margin of error · predictability · consistency · averaging · approximation
- probabilityprobability, chance, random, randomness, odds
- statisticsmean, median, mode, variance, standard deviation
- asymptoticsorder of magnitude, growth rate, decay rate, exponential growth, exponential decay
law of large numbersclinical judgment
Healthcare provider's evaluative reasoning
law of large numbersgambler's fallacy
Assuming randomness self-corrects
large, number, numbers, larger, largest, numbered, numbering, numberless, unnumbered