A simplistic definition of statistics would be, \"The analysis of data in order

Question

A simplistic definition of statistics would be, "The analysis of data in order to understand what has happened and to infer what will happen next.” Probability plays a key role in statistical analysis. In particular, in a decision making process you often have to make decisions based upon unknown future events. One such piece of the analysis part is called the expected value which depends on probability. In your initial post…

Research the meaning of expected value. Share with us your interpretation of what it means and how it can be useful. Explain an example of a real-life application emphasizing its importance.

Explanation / Answer

Expected value, as the name suggest, it is the return value expected after an action.

If probability of getting a result is P, and number of experiments is n then the expected value for binomial variable can be calculated as,

E(X) = P × n

In simpler Terms, Expected value is the return you can expect for some kind of action.

Real life example :

In gambling :

Imagine a scenario where you have two numbers to bet : 101 and 201.

The probability of your dice landing on 101 is 1/3 and probability for 201 is 2/3

If you get 101 as a hit , u will get $9000 while if you get 201, you will get $6000

Expected value for "101" is 9000*1/3 = $3000

Expected value for "201" is 6000*2/3 = $4000

AS PER THIS THEORY, BETTING ON "201" IS FAVOURABLE..!!

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.