Expected Value

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Expected Value
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Objectives

• Determine the expected value of an event.

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Vocabulary

• expected value
• decision theory

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Of all workers at a certain factory, the
proportions earning certain hourly wages are as
follows
hourly wage 8.50 9.00 9.50 10.00 12.50 15.00
proportion 20 15 25 20 15 5
Find the expected hourly wage that a worker at
this factory makes.
5
Suppose you are taking a multiple-choice test
where each questions has choices a through e. If
you get the answer correct, you get 4 points. If
you get a wrong answer, you lose 1 point.
Find the expected value of a random guess.
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Suppose you are taking a multiple-choice test
where each questions has choices a through e. If
you get the answer correct, you get 4 points. If
you get a wrong answer, you lose 1 point.
Find the expected value of eliminating one answer
and guessing among the remaining 4 possible
answers.
7
Suppose you are taking a multiple-choice test
where each questions has choices a through e. If
you get the answer correct, you get 4 points. If
you get a wrong answer, you lose 1 point.
Find the expected value of eliminating two
answers and guessing among the remaining 3
possible answers.
8
Suppose you are taking a multiple-choice test
where each questions has choices a through e. If
you get the answer correct, you get 4 points. If
you get a wrong answer, you lose 1 point.
Use decision theory and your previous answers to
create a guessing strategy for this
multiple-choice test.