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Expected Value
“The long-run average can be a number that never occurs in any single play.”
01 / SUMMARY
In short
Expected value multiplies each outcome by its probability and adds the products. It summarizes the theoretical average over many repetitions, not a promise about the next one.
03 / SCENE
In the wild
A game pays 10 with probability 0.1 and 0 otherwise: its gross expected value is 1, even though it never pays exactly 1.
04 / LIMIT
The limit
Two options with equal expected value may have very different risks, distributions, and consequences.
FINAL NOTE
What remains
Combine probabilities with consequences, then inspect spread and time horizon too.