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Expected Value Calculation

Don't choose by "most likely outcome" — multiply each outcome's probability by its value, then sum.

25 min Advanced

Goal

Overcome the "most likely outcome" grip on decisions by considering total value across all scenarios.

Steps

1

Identify the decision and options (Option A, Option B).

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Expected Outcome

Immediate

You discover an option "looking bad" whose EV is higher than the "safe" choice.

Evidence base

School: Decision Theory / Probability Mathematics

Founders: Blaise Pascal · John von Neumann (1654)

Coined by Pascal in correspondence with Fermat in 1654. Evolved in Von Neumann–Morgenstern decision theory 1944. Used at Renaissance Technologies and Wall Street decision-makers.

Frequently asked questions

How long does "Expected Value Calculation" take?

This exercise takes about 25 minutes, practiced solo in a Written reflection format.

When will I notice the effect of "Expected Value Calculation"?

You discover an option "looking bad" whose EV is higher than the "safe" choice. In the short term: Within two months, you make two decisions by EV — and notice better outcomes on average.

Is "Expected Value Calculation" evidence-based?

Yes — it draws on Decision Theory / Probability Mathematics (Blaise Pascal, John von Neumann (1654)). Coined by Pascal in correspondence with Fermat in 1654. Evolved in Von Neumann–Morgenstern decision theory 1944. Used at Renaissance Technologies and Wall Street decision-makers.

Is "Expected Value Calculation" suitable for beginners?

Its difficulty level is: Advanced. No external tools required — it can be practiced directly inside the app.

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