Money WondersPlay

Risk, Insurance & ProbabilityProbability

Expected Value

What a bet is worth on average

A coin flip pays you $3 on heads and costs you $1 on tails. Would you play? One quick multiplication knows the answer.

You'll find out

  • The one formula behind every bet
  • The letters that started it in 1654
  • A game worth infinite dollars

Why it matters

Insurance, warranties, lotteries and job offers are all bets. Expected value shows what each is worth on average.

About 3 min6 interactive slides · 5 questionsLesson 76 · Zone 9

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  7. 80Expected ValueIs the Warranty Worth It?Price the extended warranty with real odds
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