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Challenge of the week - Modeling and explaining the law of series

We posted an article last week, proving with Monte-Carlo simulations the fact that events (accidents, casino winnings) tend to appear in clusters, with long accident-free time periods between clusters. A cluster is defined as a short time period with many accidents.

Here's the article, and below is its first sentence:

Very short time periods (6 months) with several [plane]crashes, as well as long time periods (3 years) with no crashes are expected. An even distribution of plane crashes is indeed NOT expected - it would look very suspicious, and definitely not random.

In this challenge, we ask you to read our proposed explanation and spreadsheet (the spreadsheet password is 5150), and then come up with a real mathematical / statistical explanation, not just Monte-Carlo simulations like we did. Our article provide hints about developing a theoretical solution. This is an exciting data science topic.

Anyone who posts a sound statistical explanation is entitled to a free, signed copy of my data science book: Email me at [email protected] with the subject line "Law of Series Challenge" to receive your copy.

Click here to check out our previous challenge of the week.

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