Poisson, Binomial Distributions

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SUMMARY

The discussion focuses on the application of Poisson and Binomial distributions in modeling insurance claims. The number of claims per week follows a Poisson distribution with parameter λ, while the probability of a claim being accepted is p. The probability that no claims are accepted in a week is calculated as P(N = 0) = (1 - p)x. The expected number of accepted claims is given by λp, where N follows a Binomial distribution with parameters x and p.

PREREQUISITES
  • Understanding of Poisson distribution and its parameter λ
  • Knowledge of Binomial distribution and its parameters x and p
  • Familiarity with probability theory and expectation values
  • Basic skills in mathematical modeling of random variables
NEXT STEPS
  • Study the derivation of the Poisson distribution and its applications in real-world scenarios
  • Learn about the relationship between Poisson and Binomial distributions
  • Explore advanced topics in probability theory, such as the Law of Large Numbers
  • Investigate statistical software tools for simulating Poisson and Binomial processes
USEFUL FOR

Students in statistics, data analysts, and professionals in the insurance industry seeking to understand the modeling of claims and risk assessment using Poisson and Binomial distributions.

Millacol88
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Homework Statement



The number of claims that an insurance company receives per week is a random variable with the Poisson distribution with parameter λ. The probability that a claim will be accepted as genuine is p, and is independent of other claims.

a) What is the probability that no claim will be accepted over one week?
b) Find the expected number of accepted claims over one week.
c) Let N be the number of accepted claims over one week. Find the probability distribution for N.

Homework Equations



Poisson: P(X=x) = λx/x! e

The Attempt at a Solution



a) If x is the number of attempted claims, P(N = 0) = (1 - p)x, I think.

b/c) The distribution for N should be binomial(x, p). Now the expectation value of X is λ. And the expectation value of N is xp. Would this then become λp?
 
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Millacol88 said:

Homework Statement



The number of claims that an insurance company receives per week is a random variable with the Poisson distribution with parameter λ. The probability that a claim will be accepted as genuine is p, and is independent of other claims.

a) What is the probability that no claim will be accepted over one week?
b) Find the expected number of accepted claims over one week.
c) Let N be the number of accepted claims over one week. Find the probability distribution for N.

Homework Equations



Poisson: P(X=x) = λx/x! e

The Attempt at a Solution



a) If x is the number of attempted claims, P(N = 0) = (1 - p)x, I think.

b/c) The distribution for N should be binomial(x, p). Now the expectation value of X is λ. And the expectation value of N is xp. Would this then become λp?

Yes.

I mean: the expectation is ##\lambda p##. You still need to deal with the issue of the probability values---not just the expected value.
 
Last edited:

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