Expected value and how to calculate it.

[Radar]

<div class="bbWrapper">I want to begin this by stating that I don&#039;t have an issue with the formula, however, I have just finished the part of the book(Unscripted) that spoke about expected value and using the percentages of probability. I don&#039;t know where to find the probabilities for each industry. Is it based on personal experience and you&#039;d just give it a ball-park number? Is it a quick google search and then hope that the number they give you is correct?<br /> <br /> If there is a post already on this, I&#039;m sorry, I was unable to find it.<br /> <br /> Thank you in advance</div>

 

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[MJ DeMarco]

<div class="bbWrapper">It&#039;s just an estimate. The probability of success is less important than is the potential reward.<br /> <br /> The point: Large expected rewards skew expected value greatly even at 1 or .5% success probability.</div>

 

[Radar]

<div class="bbWrapper"><blockquote data-attributes="member: 1" data-quote="MJ DeMarco" data-source="post: 1109257" class="bbCodeBlock bbCodeBlock--expandable bbCodeBlock--quote js-expandWatch"> <div class="bbCodeBlock-title"> <a href="/community/goto/post?id=1109257" class="bbCodeBlock-sourceJump" rel="nofollow" data-xf-click="attribution" data-content-selector="#post-1109257">MJ DeMarco said:</a> </div> <div class="bbCodeBlock-content"> <div class="bbCodeBlock-expandContent js-expandContent "> It&#039;s just an estimate. The probability of success is less important than is the potential reward.<br /> <br /> The point: Large expected rewards skew expected value greatly even at 1 or .5% success probability. </div> <div class="bbCodeBlock-expandLink js-expandLink"><a role="button" tabindex="0">Click to expand...</a></div> </div> </blockquote>Alright, so just to clarify, we are looking at the expected outcomes and despite the probability, we would like to focus on that which has the higher potential outcome? I apologise if this is not quite what you meant</div>

 

[MJ DeMarco]

<div class="bbWrapper"><blockquote data-attributes="member: 136109" data-quote="Radar" data-source="post: 1109260" class="bbCodeBlock bbCodeBlock--expandable bbCodeBlock--quote js-expandWatch"> <div class="bbCodeBlock-title"> <a href="/community/goto/post?id=1109260" class="bbCodeBlock-sourceJump" rel="nofollow" data-xf-click="attribution" data-content-selector="#post-1109260">Radar said:</a> </div> <div class="bbCodeBlock-content"> <div class="bbCodeBlock-expandContent js-expandContent "> we would like to focus on that which has the higher potential outcome? </div> <div class="bbCodeBlock-expandLink js-expandLink"><a role="button" tabindex="0">Click to expand...</a></div> </div> </blockquote><br /> Yes. <br /> <br /> Business is hard and many entrepreneurs will vouch that starting a small cafe (with low reward) is just as hard as starting something else with higher reward.<br /> <br /> This might be relevant.<br /> <br /> <div class="bbCodeBlock bbCodeBlock--unfurl is-pending is-recrawl js-unfurl fauxBlockLink" data-unfurl="true" data-result-id="403757" data-url="https://www.thefastlaneforum.com/community/threads/stop-cheating-yourself-and-earn-what-youre-worth.109957/" data-host="www.thefastlaneforum.com" data-pending="true"> <div class="contentRow"> <div class="contentRow-figure contentRow-figure--fixedSmall js-unfurl-figure"> <img src="https://www.thefastlaneforum.com/community/data/assets/logo/fastlane_discussion_og.png" loading="lazy" alt="www.thefastlaneforum.com" class="bbCodeBlockUnfurl-image" data-onerror="hide-parent"/> </div> <div class="contentRow-main"> <h3 class="contentRow-header js-unfurl-title"> <a href="https://www.thefastlaneforum.com/community/threads/stop-cheating-yourself-and-earn-what-youre-worth.109957/" class="link link--internal fauxBlockLink-blockLink" target="" rel="" data-proxy-href=""> GOLD! - HOT! - NEWSLETTER - STOP Cheating Yourself and Earn What You&#039;re Worth! </a> </h3> <div class="contentRow-snippet js-unfurl-desc">How to Stop Cheating Yourself, And Earn What You Deserve. Question: Is the effort you&#039;re expending worth the reward? New from the Fastlane Newsletter (click link to subscribe, registered forum users can OPT-IN via their account details in control panel.) ---- Two hikers, both smitten by the...</div> <div class="contentRow-minor contentRow-minor--hideLinks"> <span class="js-unfurl-favicon"> <img src="https://www.thefastlaneforum.com/community/data/assets/logo/Fastlane32.png" loading="lazy" alt="www.thefastlaneforum.com" class="bbCodeBlockUnfurl-icon" data-onerror="hide-parent"/> </span> www.thefastlaneforum.com </div> </div> </div> </div></div>

 

[Radar]

<div class="bbWrapper"><blockquote data-attributes="member: 1" data-quote="MJ DeMarco" data-source="post: 1109264" class="bbCodeBlock bbCodeBlock--expandable bbCodeBlock--quote js-expandWatch"> <div class="bbCodeBlock-title"> <a href="/community/goto/post?id=1109264" class="bbCodeBlock-sourceJump" rel="nofollow" data-xf-click="attribution" data-content-selector="#post-1109264">MJ DeMarco said:</a> </div> <div class="bbCodeBlock-content"> <div class="bbCodeBlock-expandContent js-expandContent "> Yes.<br /> <br /> Business is hard and many entrepreneurs will vouch that starting a small cafe (with low reward) is just as hard as starting something else with higher reward.<br /> <br /> This might be relevant.<br /> <br /> <div class="bbCodeBlock bbCodeBlock--unfurl is-pending is-recrawl js-unfurl fauxBlockLink" data-unfurl="true" data-result-id="403757" data-url="https://www.thefastlaneforum.com/community/threads/stop-cheating-yourself-and-earn-what-youre-worth.109957/" data-host="www.thefastlaneforum.com" data-pending="true"> <div class="contentRow"> <div class="contentRow-figure contentRow-figure--fixedSmall js-unfurl-figure"> <img src="https://www.thefastlaneforum.com/community/data/assets/logo/fastlane_discussion_og.png" loading="lazy" alt="www.thefastlaneforum.com" class="bbCodeBlockUnfurl-image" data-onerror="hide-parent"/> </div> <div class="contentRow-main"> <h3 class="contentRow-header js-unfurl-title"> <a href="https://www.thefastlaneforum.com/community/threads/stop-cheating-yourself-and-earn-what-youre-worth.109957/" class="link link--internal fauxBlockLink-blockLink" target="" rel="" data-proxy-href=""> GOLD! - HOT! - NEWSLETTER - STOP Cheating Yourself and Earn What You&#039;re Worth! </a> </h3> <div class="contentRow-snippet js-unfurl-desc">How to Stop Cheating Yourself, And Earn What You Deserve. Question: Is the effort you&#039;re expending worth the reward? New from the Fastlane Newsletter (click link to subscribe, registered forum users can OPT-IN via their account details in control panel.) ---- Two hikers, both smitten by the...</div> <div class="contentRow-minor contentRow-minor--hideLinks"> <span class="js-unfurl-favicon"> <img src="https://www.thefastlaneforum.com/community/data/assets/logo/Fastlane32.png" loading="lazy" alt="www.thefastlaneforum.com" class="bbCodeBlockUnfurl-icon" data-onerror="hide-parent"/> </span> www.thefastlaneforum.com </div> </div> </div> </div> </div> <div class="bbCodeBlock-expandLink js-expandLink"><a role="button" tabindex="0">Click to expand...</a></div> </div> </blockquote>Thank you very much, I will have a look at that <img src="/community/imgs/emoticons/em-smile2.png" class="smilie" loading="lazy" alt=":)" title="Smile :)" data-shortname=":)" /></div>