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Department of Mathematics & Statistics

STAT372 Stochastic Modelling

First Semester
18 points

This paper introduces at undergraduate level an important class of statistical methods that is widely used in many areas of research and research-informed decision making. It is an introduction to practical data analysis using statistical methods for processes occurring randomly in time and space. Stochastic models have been applied to natural phenomena such as outbreaks of infectious diseases, crimes, financial downturns, stock market return, transitions between high and low economic growth, accident related insurance claims, earthquakes, volcanic eruptions, and forest fires. Real data from economics, finance, geosciences, neuroscience, social sciences and epidemiology will be used to introduce various stochastic models and their applications.

Main topics

We will focus on applications of the following models in real-world data analysis, model checking, simulation and forecasting from these models.

Potential students

Any student who has taken either STAT261 or STA270 can take this paper. This paper will allow students who are majoring in Statistics, Mathematics, Physics, Finance, Economics, Health Sciences and Social Sciences to acquire skills in this field of Statistics and broaden their future job and research opportunities.


STAT 270 or 261


Dr Tilman Davies, Room 222

Dr Matthew Parry, Room 236

Associate Professor Ting Wang, Room 518


Monday at 11 am in Room 240, Science III

Wednesday and Friday at 11 am in Room 241, Science III

(Subject to change with notice in advance)


Thursdays 9-10am in Laboratory B21, Science III

Recommended readings:


There will be 6 assignments, contributing 25% of the final assessment mark, and a mid-term test that contributes the 15% of the final assessment mark.

Final mark

Your final mark F in the paper will be calculated according to this formula:

F = 0.6E + 0.25A + 0.15T


and all quantities are expressed as percentages.

Students must abide by the University’s Academic Integrity Policy

Academic integrity means being honest in your studying and assessments. It is the basis for ethical decision-making and behaviour in an academic context. Academic integrity is informed by the values of honesty, trust, responsibility, fairness, respect and courage.

Academic misconduct is seeking to gain for yourself, or assisting another person to gain, an academic advantage by deception or other unfair means. The most common form of academic misconduct is plagiarism.

Academic misconduct in relation to work submitted for assessment (including all course work, tests and examinations) is taken very seriously at the University of Otago.

All students have a responsibility to understand the requirements that apply to particular assessments and also to be aware of acceptable academic practice regarding the use of material prepared by others. Therefore it is important to be familiar with the rules surrounding academic misconduct at the University of Otago; they may be different from the rules in your previous place of study.

Any student involved in academic misconduct, whether intentional or arising through failure to take reasonable care, will be subject to the University’s Student Academic Misconduct Procedures which contain a range of penalties.

If you are ever in doubt concerning what may be acceptable academic practice in relation to assessment, you should clarify the situation with your lecturer before submitting the work or taking the test or examination involved.

Types of academic misconduct are as follows:


The University makes a distinction between unintentional plagiarism (Level One) and intentional plagiarism (Level Two).

  • Although not intended, unintentional plagiarism is covered by the Student Academic Misconduct Procedures. It is usually due to lack of care, naivety, and/or to a lack to understanding of acceptable academic behaviour. This kind of plagiarism can be easily avoided.
  • Intentional plagiarism is gaining academic advantage by copying or paraphrasing someone elses work and presenting it as your own, or helping someone else copy your work and present it as their own. It also includes self-plagiarism which is when you use your own work in a different paper or programme without indicating the source. Intentional plagiarism is treated very seriously by the University.

Unauthorised Collaboration

Unauthorised Collaboration occurs when you work with, or share work with, others on an assessment which is designed as a task for individuals and in which individual answers are required. This form does not include assessment tasks where students are required or permitted to present their results as collaborative work. Nor does it preclude collaborative effort in research or study for assignments, tests or examinations; but unless it is explicitly stated otherwise, each students answers should be in their own words. If you are not sure if collaboration is allowed, check with your lecturer..


Impersonation is getting someone else to participate in any assessment on your behalf, including having someone else sit any test or examination on your behalf.


Falsification is to falsify the results of your research; presenting as true or accurate material that you know to be false or inaccurate.

Use of Unauthorised Materials

Unless expressly permitted, notes, books, calculators, computers or any other material and equipment are not permitted into a test or examination. Make sure you read the examination rules carefully. If you are still not sure what you are allowed to take in, check with your lecturer.

Assisting Others to Commit Academic Misconduct

This includes impersonating another student in a test or examination; writing an assignment for another student; giving answers to another student in a test or examination by any direct or indirect means; and allowing another student to copy answers in a test, examination or any other assessment.

Further information

While we strive to keep details as accurate and up-to-date as possible, information given here should be regarded as provisional. Individual lecturers will confirm teaching and assessment methods.