Question

What do you mean by Subjective Probability?

Answer 1

Probability theory:

Probability can be objective or subjective.

Objective probability: This is based purely on the analysis of a set of data.

For example,

1. In the tossing of a coin, the probability is based on the information of whether the coin is biased or not.
2. While throwing an unbiased dice, the possible outcome will be any of the numbers from $1-6$

Subjective probability: This is based on an individual's perspective. The probability is based on a person's own experience and understanding.

For example,

• Betting at a race track. A person who has good knowledge can do an analysis from his experience before placing the bet.
• The weather forecast for the day by a common person can be subjective because the prediction is done from their personal experience and not based on previously analyzed data.

Hence, the meaning of subjective probability is explained.