Expected Value

Likelihood of each result times it’s result.

When making decisions, take into account Expected Value.

Expected Value is the sum when you add (each possible outcome’s result x it’s likelihood).

Examples

Flip a coin, I give you $10 i f i t ’ s h e a d s, I g i v eyo u n o t hin g i f i t ’ s t ai l s . E x p ec t e d Va l u e :$ 2.50.
Flip a coin, I give you $10 i f i t ’ s h e a d s, yo ug i v e m e$ 10 if it’s tails. Expected Value: $0
Roll a die, if it’s a 6 I give you $60. I f i t ’ s an y t hin g e l seyo ug i v e m e$ 10. Expected Value: (1/6)* $60 + (5/6) * (-$ 10) = $1.67