Expected value

Expected value is the average result of a choice repeated many times — each possible payoff weighted by its probability.

Thinking in expected value means comparing options by:

1. Listing the possible outcomes and the payoff attached to each.

2. Weighting every payoff by its probability and summing them.

3. Taking the higher expected value, unless a loss along the way would end the game.

Take positive expected value repeatedly, and never at a size that can ruin you.