| Take any random pair of people and the | | | | to have DIFFERENT birthdays. |
| probability of them having the exact same | | | | |
| birthday sits at (1/365)?0.0027 or roughly | | | | 4) Therefore, this concludes that out of a |
| 0.27%. The chance of it seems so low that | | | | group of 23 people, there exists 50.05% |
| many would ignore and assume it never | | | | probability of having a pair born on the same |
| occurring. | | | | date. |
| | | | |
| The Birthday Paradox however makes available | | | | As shown, it takes only 23 unique people or |
| mathematical means to display that the | | | | events for something formally considered |
| "improbable" occurs quite more often than | | | | "highly unlikely" to transpire. This suggests |
| general belief. How many people does it take | | | | that business operators could adopt a more |
| to have over 50% chance of a pair sharing the | | | | meticulous and mathematical approach to risk |
| same birthday? | | | | management. |
| | | | |
| 23 | | | | Killer storms or typhoons come on the ocean |
| | | | infrequently. Yet, shipbuilders make certain |
| Explanation, please keep in mind this example | | | | to construct and design the vessels to endure |
| ignores leap years. | | | | the worst of conditions. When it comes down |
| | | | to life or death, survival relies on |
| 1) With 23 people 253 possible pairs exist. | | | | weathering the rare catastrophes. |
| | | | |
| 23*22/2=253 | | | | Does your business model include contingency |
| | | | plans for short term negative outcomes or if |
| (Look up Permutations if you don't understand | | | | competitors employ unforeseen strategies? The |
| this) | | | | investors of bankrupt New Zealand financing |
| | | | companies had to learn this the hard way, |
| 2) Now instead of finding the chance of two | | | | with some losing a lifetime of savings. I |
| people having the same birthday, let us find | | | | often hear the phrase "take calculated |
| the probability of them having DIFFERENT | | | | risks", yet not many people understand the |
| birthdays. | | | | calculation part. It certainly does not |
| | | | equate to guessing and hoping for the best. |
| 1-1/365?0.9973 or 99.73% or 364/365 in | | | | |
| fraction | | | | I plan to discuss risk management in the near |
| | | | future. In the mean time, free resources are |
| 3) Plugging in the number of possible pairs. | | | | available everywhere at the library or over |
| | | | the internet. Learn to survive the worst of |
| (364/365)^253?0.4995 or 49.95% chance of | | | | times, and everything will turn out A O K. |
| having every possible pair within the group | | | | |