🎯 Expected Value: the mathematical compass for better decisions In data science and business, Expected Value is a key tool for making decisions under uncertainty.
💡 What is it? It’s the weighted average of all possible outcomes, taking into account the probability of each.
🔍 Simple example:
Imagine a marketing campaign with different scenarios of success or failure. If you multiply each possible outcome by its probability and sum them up, you get the Expected Value.
If that number is positive ➜ the decision makes sense from a probabilistic perspective.
🧩 Why it matters:
- 📈 Pricing strategy
- 🛠️ Feature prioritization
- 💰 Investment evaluation
- ⚖️ Risk management
- 🔄 Resource allocation
👶 For a beginner:
Think of Expected Value as asking yourself: “If I repeated this decision thousands of times, what would be my average gain?”
It doesn’t predict the future, but it helps you choose with a clear head.
