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Stanford University

Introduction to Probability Management

Stanford University via edX

Overview

This course assumes that you are comfortable with Microsoft Excel, but you do not need training in statistics. If you wish to receive a verified certificate, you must download the free SIPmath™ Modeler Tools for Excel from nonprofit ProbabilityManagement.org, and it is recommended that you procure The Flaw of Averages: Why we Underestimate Risk in the Face of Uncertainty, John Wiley & Sons, either the 1st or 2nd Edition.

Syllabus

Section 1: Probability Management Basics

  • Post Traumatic Statistics Disorder (PTSD)
  • The Flaw of Averages
  • The Arithmetic of Uncertainty
  • Limbic Analytics: Connecting the Seat of the Intellect to the Seat of the Pants
  • The Hindu/Arabic Numerals of Uncertainty
  • The Probability Power Grid
  • Data Table Simulation in Excel

Section 2: The Five Mindles of Uncertainty

A MINDle lets you grasp something with your mind as a HANDle lets you grasp something with your hand. Understanding the arithmetic of uncertainty requires grasping five concepts beyond the operations of standard arithmetic. They are:

  • Risk vs. Uncertainty
  • Uncertain Numbers
  • Combinations of Uncertainties
  • Plans Based on Uncertainties
  • Interrelated Uncertainties

Section 3: Introduction to Applications

  • Nonlinear cost functions
  • Building a Risk Model
  • Estimating distributions from forecasts

Section 4: The Human Element

The PTSD picked up in a statistics class may be addressed through the following concepts:

  • The permission to be uncertain
  • Unambiguous Uncertainty
  • Limbic Analytics

Taught by

Sam Savage

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