MAKE A BETTER PREDICTION ABOUT FUTURE EVENTS
What is Expected Valu e There is a concept in Probability Theory called Expected Value(EV). So what the Internet says about EV. Definition : “ Expected value(EV) is the average value of a random variable over a large number of experiments”. OK, but it looks like “Mean” to me? Then what is the difference between EV and Mean? Let’s play a simple game. I come up to you and offer you to play coins, if it’s heads, I get a dollar, if it’s tails, you get three dollars.Easy bet right? The mean is 3+(−1)/2 = +1. The mean outcome is +1 for you. But, what I don’t tell you is that the coin flips heads with probability of .8 and tails with probability of .2. The expected value is not +1 for you, but instead (0.8∗−1)+(0.2∗3)=−0.2. The expected value is the weighted mean for a random event like described above....