A discrete random variable X with a probability distribution function (p.d.f.) of the form:
P(X=k)= \(\frac{e^{-λ}λ^k}{k!}\)
is said to be a Poisson random variable with parameter λ. We write
X ~ Po(λ)
Expectation and Variance
If X ~ Po(λ), then:
E(X) =λ
Var(X) = λ
Sums of Poissons
Suppose X and Y are independent Poisson random variables with parameters λ and μ respectively. Then X + Y has a Poisson distribution with parameter λ+μ. In other words:
If X ~ Po(λ) and Y ~ Po(μ), then X + Y ~ Po(λ+μ)
Random Events
The Poisson distribution is useful because many random events follow it.
If a random event has a mean number of occurrences λ in a given time period, then the number of occurrences within that time period will follow a Poisson distribution.
For example, the occurrence of earthquakes could be considered to be a random event. If there are 5 major earthquakes each year, then the number of earthquakes in any given year will have a Poisson distribution with parameter 5.
Example
There are 50 misprints in a book which has 250 pages. Find the probability that page 100 has no misprints.
The average number of misprints on a page is 50/250 = 0.2 . Therefore, if we let X be the random variable denoting the number of misprints on a page, X will follow a Poisson distribution with parameter 0.2 .
Since the average number of misprints on a page is 0.2, the parameter, λ of the distribution is equal to 0.2 .
P(X = 0) = \(\frac{e^{-0.2}0.2^0}{0!}\) = 0.819
Binomial Approximation
The Poisson distribution can be used as an approximation to the binomial distribution.
A Binomial distribution with parameters n and p can be approximated by a Poisson distribution with parameter np.