Pretty much the title.
In: 388
The law of large numbers is a way of saying that given enough attempts, results will tend towards expected averages.
Fire example: if you have a 100 sided dice and roll it once. You expect every number to have a 1-in-100 chance of occurring, but after 1 roll only one value will come up… say 61. While every other value doesn’t get rolled.
Roll the dice 1,000,000 times however (a large number) and now each value will get rolled about 10,000 times +/- a couple.
This can be really valuable in say insurance where a company wants to insure thousands and thousands of people/cars/houses so that what actually happens is close to what you would expect for long term averages. If they only insured a single house then claims would be all over the place and much harder to predict.
Latest Answers