Expected Value

By EA Handbook @ 2022-07-23T23:00 (+10)

This is a linkpost to https://non-trivial.org/lessons/making-decisions-under-uncertainty


John_Walker @ 2022-09-19T15:44 (+12)

Not sure if this is the best forum for feedback, so please direct me elsewhere and happy to delete my comment if not. 

A few suggestions on the explanation of EV. While the examples are clear, I found the definition of expected value confusing. 

It is written as "expected value = likelihood of option x value of option", and "The expected value is the probability multiplied by the value of each outcome".

I read this as: , which doesn't capture the need to sum across outcomes.

Pitched at the same level of technicality, I think a clearer definition is: "The expected value of an uncertain decision is the sum across all outcomes of the value of each outcome multiplied by its probability." 

Or some other wording that captures that this is a weighted average. This properly implies the necessary summation across outcomes: .

It might also be worth:

Qian-Jing Zhao @ 2023-03-27T10:50 (+1)

Hi John, your revised version of definition helps me greatly.

Hariimah @ 2023-10-10T01:45 (+1)

Have practical evidence that your intervention is acutally producing good results that positively impact the beneficiaries