B. Expected value is a measure of central tendency; a value for which the results will tend to. Remaining 97.5% pay nothing! Compute the expected value given a set of outcomes, probabilities, and payoffs If you're seeing this message, it means we're having trouble loading external resources on our website.

The expected value or the population mean of a random variable indicates its central or average value. When a probability distribution is normal, a plurality of the outcomes will be close to the expected value. For example, imagine buying a sweepstake ticket for $1.00. Word Problems: Expected Value Word problems involving probability models often ask you to decide about whether an experiment is likely to turn out to your advantage or not. 5% of tickets payout $100.

The best example to understand the expected value is Dice. Example #1. EMV is often used with Decision Trees, and it requires an appreciation of the concept of expected Value or Expected Monetary Value ─ a concept similar to Exposure. Examples.


We can calculate expected value for a discrete random variable — one in which the number of potential outcomes is countable — by taking a sum in which each term is a possible value of the random variable multiplied by the probability of that outcome. There are two possible prizes: $100.00 and $10. 00. For example, compare a high-deductible versus a low-deductible automobile insurance policy using various, but reasonable, chances of having a minor or a major accident. Expected Value This video shows the formula of expected value, and compute the expected value of a game. Common Core: HSS-MD.A.5 . Example of Expected Value (EV) To calculate the EV for a single discrete random variable, you must multiply the value of the variable by the probability of that value occurring. In this article, we will look at the expected value of a random variable along with its uses and applications. It is an important summary value of the distribution of the variable. Example 1: A local club plans to invest $ 10000 to host a baseball game.

Below are some examples of the expected value. Any given random variable contains a wealth of information.
If we assume X as the outcome of a dice that is rolled, X is the number that appears on the top of the rolled dice. In probability theory, an expected value is the theoretical mean value of a numerical experiment over many repetitions of the experiment. The expected value or mean of a discrete distribution is the long-run average of occurrences. We must realize that any one trial using a discrete random variable yields only one outcome. A dice has 6 sides and the probability of getting a number between 1 to 6 is 1/6. 0% payout $10. Evaluate and compare strategies on the basis of expected values. They expect to sell tickets worth $ 15000 . However, if the process is repeated long enough, the average of the outcomes are most likely to approach a long-run average, expected value or mean value. If you're behind a web filter, please make sure that the domains *.kastatic.org and *.kasandbox.org are unblocked.

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