The probability of Joe contracting an STD at least once in four sexual encounters, given a 1 in 4 chance per encounter, is calculated by finding the probability of not contracting an STD in all four encounters, which is 1 - (0.75^4). The resulting probability indicates a significant risk of contracting an STD at least once. To determine the probability of Joe contracting an STD exactly twice in those four encounters, a combination formula would be necessary. This involves using the binomial probability formula, which accounts for the number of successes in a given number of trials. The discussion highlights the application of probability concepts in real-life scenarios.