Expected Value
Probability matters as much as possibility.
Shrink Definition
Expected value is the average outcome anticipated from a decision when each possible outcome is weighted by its probability. Expected value encourages evaluating decisions based on likely long-term outcomes rather than isolated successes or failures.
Plain language
Good decisions consider both likelihood and payoff.
Shrink Insight
A rare great outcome doesn't necessarily make a strategy wise.
Why it matters
Expected value improves: • investing • medicine • entrepreneurship • insurance • leadership • negotiation • strategic planning
Common misunderstanding
A good decision can still produce a bad outcome. A poor decision can occasionally produce a good outcome. Expected value evaluates the decision process, not a single result.
Shrink Perspective
Judge decisions by the quality of reasoning, not isolated luck.
Shrink Reflection
Have you ever abandoned a good strategy because of one disappointing outcome?
Shrink Journal
Identify one recurring decision. List the likely outcomes and estimate their probabilities.
Shrink Step
Think in averages rather than anecdotes.
Shrink Minute
Probability deserves attention.
Shrink Takeaway
Better decisions compound over time.
Medical boundary
This concept is educational and shouldn't be used to self-diagnose. It doesn't replace care from a licensed clinician. Symptoms, medication, and treatment decisions should be discussed with a qualified professional, and emergency symptoms require emergency care.
Evidence summary
Expected value is a central principle of probability theory, economics, medicine, finance, and decision science. It supports evaluating choices under uncertainty by integrating outcomes with their likelihood.
Sources
American Psychological Association (APA); Peer-reviewed scientific literature; Peer-reviewed decision science and behavioral economics literature
Reference status: authorities listed citation pending