Expected value

The calculated average outcome if an economic transaction (such as a gamble) is undertaken a large number of times. If a fair or unbiased coin is thrown a large number of times, it should come up heads on approximately half the number of throws. So the probability of heads is 0.5. The probability of getting tails is also 0.5. If a bet is undertaken whereby £2 is given if heads comes up, but £ 1 is taken away if tails comes up, then the expected value of the bet is £0.50. If the bet was undertaken a large number of times, say 100 times, then the person would expect to get heads fifty times and tails fifty times. This means winning £100 (50 times £2) and losing £50 (50 times a loss of £1) so gaining £50 overall (£100 minus £50). So, as there were 100 throws, this means an average gain of £0.50 (£50 divided by 100) for each throw.