What is expected value?medium

Type
conceptual
Topic
expected-value
Frequency
common
Tags
expectation, decision-making
Answer

Expected value is the long-run average value of a random variable.

Explanation

For a discrete random variable, it is the sum of each value times its probability. It is useful for decision-making, risk analysis, ranking, and evaluating bets or product outcomes.

Follow-upWhy can expected value be misleading for high-risk decisions?