Decision

Expected Value

Σ probability × outcome

Best for: choosing under uncertainty
Time: 15–30 min
Difficulty: Intermediate

Example

Deciding whether to run a paid ad test with uncertain payoff

Expected value calculation

Outcome A: success (30% × +$40k) = +$12,000
Outcome B: break even (40% × $0) = $0
Outcome C: lose budget (30% × −$10k) = −$3,000
Expected value = +$9,000
Decision: run it — positive EV with manageable downside

Related frameworks

Cost-Benefit

Monetize costs vs. benefits over time

Decision Tree

Branching outcomes and probabilities

Regret Minimization

Choose what you'd regret least at 80

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