What is 'Objective Probability'
Objective probability is the probability that an event will occur based an analysis in which each measure is based on a recorded observation or a long history of collected data. The concept of subjective probability can be contrasted with the idea subjective estimate. Objective probabilities are a more accurate way to determine the probability of a given outcome than subjective measurements. An objective probability will examine past data and use mathematical equations involving the data to determine the likelihood of an independent event occurring. An independent event is an event whose outcome is not influenced by prior events. Subjective probability, by contrast, may utilize some method of data analysis, but is largely based on a person's estimate or intuition about a situation and the likely outcome.
BREAKING DOWN 'Objective Probability'
Objective probability allows the observer to gain insight from historical data to gain insight of the likelihood of a given outcome. In contrast, subjective probability allows for the observer to gain insight by referencing things they have learned and their own experience.
Example of Objective Probability
For example, one could determine the objective probability that a coin will land "heads" up by flipping it 100 times and recording each observation. This would yield an observation that the coin landed on "heads" approximately 50% of the time. This is an example of objective probability. An example of subjective probability is when a person who is educated about weather patterns examines things such as barometric pressure, wind shear, ocean temperature, and predicts the likelihood that a hurricane will head in a certain direction.
When performing any statistical analysis, it is important for each observation to be an independent event that has not been subject to manipulation. The less biased each observation is, the less biased the end probability will be.

Prior Probability
The probability that an event will reflect established beliefs ... 
Empirical Probability
Empirical probability uses the number of occurrences of an outcome ... 
Posterior Probability
Posterior probability is the revised probability of an event ... 
Probability Distribution
A statistical function that describes all the possible values ... 
Binomial Distribution
A probability distribution that summarizes the likelihood that ... 
Addition Rule For Probabilities
The addition rule for probabilities is the probability for either ...

Investing
Financial Forecasting: The Bayesian Method
This method can help refine probability estimates using an intuitive process. 
Investing
Scenario Analysis Provides Glimpse Of Portfolio Potential
This statistical method estimates how far a stock might fall in a worstcase scenario. 
Investing
Multivariate Models: The Monte Carlo Analysis
This decisionmaking tool integrates the idea that every decision has an impact on overall risk. 
Investing
What Are The Odds Of Scoring A Winning Trade?
Just because you're on a winning streak doesn't mean you're a skilled trader. Find out why. 
Investing
Redefining Investor Risk
Changing the way you think about time and risk can change the way you invest. 
Insurance
Why Your Medicare Patient Status Matters
If you or a loved one are covered by Medicare and require a hospital stay, be sure to clarify whether you are inpatient, outpatient or under observation. 
Investing
Warren Buffett's Probability Analysis is His Key to Success
Warren Buffett didn't get rich through luck. His shrewd acumen when picking investments is based on thorough research and careful attention to probability. 
Investing
Behavioral Bias: Cognitive Versus Emotional Bias in Investing
We all have biases. The key to better investing is to identify those biases and create rules to minimize their effect on investing decisions.