Definition of expected value (EV): Statistical concept aimed at helping executives make better decisions under conditions of uncertainty. It focuses on evaluation. Expectation Value. The expectation value of a function f(x) in a variable x is denoted or E{f(x)}. For a single discrete variable, it is defined by. In probability theory, the expected value of a random variable, intuitively, is the long-run average value of repetitions of the experiment it represents. For example Definition · General definition · Properties · Uses and applications.
Expected value for a discrete random variable. You may need to use a sample space. Leave a Reply Cancel reply Your email address will not be published. The odds that you win the season pass are 1 out of This will not store any personal information. Using the probability distribution for number of tattoos, let's find the mean number of tattoos per student.

What is expected value Video

Expected Value: E(X) Text is available under the Creative Commons Attribution-ShareAlike License ; additional terms may apply. The use of the letter E to denote expected value goes back to W. Computing expectations by conditioning". Unauthorized duplication, in whole or in part, is strictly prohibited. The expected value plays important roles in a variety of contexts. Making decisions with expected values. For discrete random variables the formula becomes while for absolutely continuous random variables it is It is possible albeit non-trivial to prove that the above two formulae hold also when is a -dimensional random vector, is a real function of variables and. More practically, the expected value of a discrete random variable is the probability-weighted average of all possible values. A discrete random variable is a random variable that can only take on a certain number of values. Working capital is a measure of both a company's efficiency and its short-term financial The formal definition subsumes both of these and also works for distributions which are neither discrete nor continuous; the expected value of a random variable is the integral of the random variable with respect to its probability measure. In other words, each possible value the random variable can assume is multiplied by its probability of occurring, and the resulting products are summed to produce the expected value. Roughly speaking, this integral is the limiting case of the formula for the expected value of a discrete random variable Here is replaced by the infinitesimal probability of and the integral sign replaces the summation sign. Views Read Edit View history. We will call this advantage mathematical hope. A completely general and rigorous definition of expected value is based on the Lebesgue integral. Theory of probability distributions Gambling terminology. This does not belong to me. Take, for example, a normal six-sided die.