Expected Value
Blaise Pascal · 1654
"Choose the option whose average outcome, weighted by probability, is highest."
Expected value multiplies each possible outcome by its probability and sums them. A 10% chance of winning $100 has an EV of $10 — worth paying up to $10 for. It sounds mechanical, but it's the discipline that separates gambling from investing.
The trap in EV is confusing expected value with expected outcome. On a single bet, you get one draw — not the average. Kelly and position sizing exist because a positive-EV bet can still ruin you if you bet too much. EV is necessary but not sufficient; it must be combined with variance and ruin.
A bet has 90% chance of losing $10 and 10% chance of winning $200. What's the EV?
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The explanation above is written with AI assistance. These are the originals — go to them to check it.
- Thinking in Betsannieduke.com
The Casino's Four Gears: Edge, Volume, Sizing, and Bankroll
"A tiny, repeatable statistical edge becomes a near-certain profit only when combined with three other things — enormous volume, bets sized to the edge rather than to conviction, and a bankroll large enough to survive a bad stretch. Miss any one of the four and having an edge stops mattering."