Expected Value

From the book, Chapter 6. Expected value = Σ (payout × chance). The book’s raffle: 1,000 tickets at $5, one $1,000 prize, five $200 prizes and twenty $50 prizes. That’s chances of 0.1%, 0.5% and 2%, an expected value of $3.00, and an average loss of $2.00 a ticket. Nobody ever receives the expected value; it’s the long-run average.