The topic of probability doesn’t seem to have importance during our math classes. Some use it to their advantage while others dread its existence. It might seem simple as all the solutions fall within a tiny range from 0 to 1.
Little do we know its effect on our daily lives.
So what is expected value? And why does it matter?
Let me explain with a simple example:
Imagine you are at a carnival and there is a game that costs $1 to play. All you have to do is pick 1 out of 4 boxes & you will walk away with whatever is inside the chosen box. The boxes contains items that are worth the following.
Box A: $0.
Box B: $0.50
Box C: $0.50
Box D: $10
The stall-owner tells you that the expected value of your winnings is $2.75.
Calculation: ($0 x 1/4) + ($0.50 x 1/4) + ($0.50 x 1/4) + ($10 x 1/4) = $2.75.
The math clearly tells you to spend a dollar on this harmless game.
Well my friend, conclusions can be drawn as quick as losing your money.
Think of it from another perspective: Chances of making a loss is 3 out of 4.
So what went wrong? In fact, both of us are telling the truth. In other words, expected value is the average value of the 4 boxes, meaning that no box is worth $2.75.
Truths can be pleasing & deceiving at the same time. Make clear thinking a habit today.
Leap with Luqe 