www.lesswrong.com/posts/Cc4vdpTpDv3DZLahs/llms-choose-the-safer-gamble-yet-price...
1 correction found
Both options have equal expected value.
The two leads do not have equal expected value as written. Lead A’s expected value is $240 (0.8×300), while Lead B’s is $280 (0.2×1,400).
Full reasoning
Using the article’s own numbers, the expected value of Lead A is 0.80 × $300 = $240, and the expected value of Lead B is 0.20 × $1,400 = $280. That means Lead B’s expected value is $40 higher, so the two options are not equal-EV as written.
A standard expected-value calculation multiplies each outcome by its probability and sums the products. On that basis, this sentence is an arithmetic error in the illustrative example, not just a matter of interpretation.
2 sources
- Expected Value Analysis (Economic Risk Analysis) | EME 460: Geo-Resource Evaluation and Investment Analysis
Expected profit is the probability of receiving a certain profit times the profit... Example: Expected Value = (4/54) * 10 − (50/54) * 1.
- CM Expected Value
We can compute the expected value by multiplying each outcome by the probability of that outcome, then adding up the products.