What does expected value tell you?
Method: Expected value is the probability-weighted average across modeled outcomes. It helps compare repeated or risk-bearing choices, but it does not predict the result of one attempt.
Weight each modeled outcome
- List outcomes that do not overlap.
- Assign probabilities that total 100%.
- Multiply each value by its probability.
- Add the weighted contributions and inspect the assumptions.
Interpret the contribution, not only the total
A 50% chance of gaining 20, a 30% chance of gaining 5, and a 20% chance of losing 10 produces an expected value of 9.5 per attempt.
An average does not remove downside
Keep outcome coverage and value units consistent
The probability total is a model check. Less than 100% means an outcome is missing; more than 100% usually means branches overlap. Every value must use the same unit. Mixing time saved with money earned requires an explicit conversion rather than adding unlike quantities.
A negative contribution is not an error when an outcome represents cost or loss. Read each contribution beside the total to see which assumption drives the result. A sensitivity check should start with that probability or value.
Boundary of the result
A positive average can still hide an unacceptable worst case, cash-flow constraint, or one-time risk.
Continue with the method
Use the expected value article and the decision matrix calculator and the five whys root cause worksheet to move from a quick result to a complete reasoning process.