vpFREE2 Forums

EV Vs. ER

#1

Could someone please explain the difference between EV "expected Value" and ER "Expected Return. Thanks, Moe

[Non-text portions of this message have been removed]

#2

See FAQ #8:

http://members.cox.net/vpfree/FAQ.htm#8

···

On 26 Aug 2008 at 20:03, a-1insp@comcast.net wrote:

Could someone please explain the difference between EV "expected
Value" and ER "Expected Return. Thanks, Moe

#3

The definitions in the faq do not reflect the general usage of the terms. ER and EV are
really the same thing. Proper use of either requires specify the quantities "units". The
unit could be a percentage (of something), real dollars, fraction (of something) etc. Way
too much time has been spent in this forum trying to keep the definitions of those quantities distinct all along ignoring the units issue. The units are crucial. Without units,
its all a mess. You could have an ER or an EV that is XX$ / hour or YY% / trip , etc.

Also: "expectation" = "the expected value" = "the first moment of the PDF" = "[the simple arithmetic] mean" = "expected return" -- so long as they all have the same units.

···

--- In vpFREE@yahoogroups.com, "vpFae" <vpFae@...> wrote:

On 26 Aug 2008 at 20:03, a-1insp@... wrote:

> Could someone please explain the difference between EV "expected
> Value" and ER "Expected Return. Thanks, Moe

See FAQ #8:

http://members.cox.net/vpfree/FAQ.htm#8

#4

Expected Value is just a value, as you say, depends on the units of
value being expressed. Expected Return is a ratio, a ratio of output
to input, i.e. "return", thus if the units of value of input and
output are the same, the ratio is unitless. A typical Expected Value
might be $0.01 or -$0.01, a typical Expected Return might be 1.01 or
1%, or .99 or -1%.

The definitions in the faq do not reflect the general usage of the

terms. ER and EV are

really the same thing. Proper use of either requires specify the

quantities "units". The

unit could be a percentage (of something), real dollars, fraction

(of something) etc. Way

too much time has been spent in this forum trying to keep the

definitions of those quantities distinct all along ignoring the units
issue. The units are crucial. Without units,

its all a mess. You could have an ER or an EV that is XX$ / hour or

YY% / trip , etc.

Also: "expectation" = "the expected value" = "the first moment of

the PDF" = "[the simple arithmetic] mean" = "expected return" -- so
long as they all have the same units.

···

--- In vpFREE@yahoogroups.com, "cdfsrule" <vpfree_digests@...> wrote:

--- In vpFREE@yahoogroups.com, "vpFae" <vpFae@> wrote:
>
> On 26 Aug 2008 at 20:03, a-1insp@ wrote:
>
> > Could someone please explain the difference between EV "expected
> > Value" and ER "Expected Return. Thanks, Moe
>
> See FAQ #8:
>
> http://members.cox.net/vpfree/FAQ.htm#8
>

#5

The definitions in the faq do not reflect the general usage of the

terms. ER and EV are

really the same thing. Proper use of either requires specify the

quantities "units". The

unit could be a percentage (of something), real dollars, fraction (of

something) etc. Way

too much time has been spent in this forum trying to keep the

definitions of those quantities distinct all along ignoring the units
issue. The units are crucial. Without units,

its all a mess. You could have an ER or an EV that is XX$ / hour or

YY% / trip , etc.

Also: "expectation" = "the expected value" = "the first moment of

the PDF" = "[the simple arithmetic] mean" = "expected return" -- so
long as they all have the same units.

Amen

···

--- In vpFREE@yahoogroups.com, "cdfsrule" <vpfree_digests@...> wrote:

#6

--- In vpFREE@yahoogroups.com, "nightoftheiguana2000"
<nightoftheiguana2000@...> wrote:

Expected Value is just a value, as you say, depends on the units of
value being expressed. Expected Return is a ratio, a ratio of output
to input, i.e. "return", thus if the units of value of input and
output are the same, the ratio is unitless. A typical Expected Value
might be $0.01 or -$0.01, a typical Expected Return might be 1.01 or
1%, or .99 or -1%.

Also a good answer. Better than in the FAQ

#7

nightoftheiguana2000 wrote:

> Expected Value is just a value, as you say, depends on the units
> of value being expressed. Expected Return is a ratio, a ratio of
> output to input, i.e. "return", thus if the units of value of
> input and output are the same, the ratio is unitless. A typical
> Expected Value might be $0.01 or -$0.01, a typical Expected
> Return might be 1.01 or 1%, or .99 or -1%.

deuceswild1000 wrote:

Also a good answer. Better than in the FAQ

I respectfully disagree, on the latter count. I find that the vpFREE
definitions of ER/EV are very practical.

"ER" is a very well defined term, as NOTI indicates. "EV" is very
problematic.

"EV" has no fixed meaning in the general world; it only has meaning
within a specific context. It is exactly what the term suggests --
it's the arithmetic average of values observed in a given situation.

You can speak of the EV for the number of cars crossing an
intersection in any given hour; or the EV for the number of cigarettes
a slot player will smoke in a session (or the number of minutes
cigarettes will smolder during their session). EV can be defined for
any situation in any manner. In order to use the term intelligently
in a discussion, a specific definition needs to be understood as a
standard by all participants.

In vp discussions, EV is generally interpreted to be a dollar value,
usually having one of two definitions:

- coin out (credits/$) for a period of play, or
- profit (credits/$), translate as "coin out - coin in", for a period
of play.

Either of these two definitions is equally valid. I presume the the
Admin elected to go with "coin out" in the interest of avoiding
ambiguity, which I find acceptable.

However, I think "profit" would be a more accurate representation of
the general use of the term "EV" here. For example, we speak of
"positive" or "negative" EV games (where expected coin out > or < than
coin in).

- Harry

#8

LOL. Let's waste more time. EV is a VERY well defined and commonly used term for a fundamental concept- the first moment of a probability distribution. I guess all the math
and econ books, and dictionaries out there all need updating. Please start with the
wikipedia. I'm sure they could use our help.
http://en.wikipedia.org/wiki/Expected_value
http://en.wikipedia.org/wiki/Expected_return

···

--- In vpFREE@yahoogroups.com, "Harry Porter" <harry.porter@...> wrote:

I respectfully disagree, on the latter count. I find that the vpFREE
definitions of ER/EV are very practical.

"ER" is a very well defined term, as NOTI indicates. "EV" is very
problematic.

"EV" has no fixed meaning in the general world; it only has meaning
within a specific context. It is exactly what the term suggests --
it's the arithmetic average of values observed in a given situation.

#9

--- In vpFREE@yahoogroups.com, "Harry Porter" <harry.porter@...>
wrote:

nightoftheiguana2000 wrote:
> > Expected Value is just a value, as you say, depends on the

units

> > of value being expressed. Expected Return is a ratio, a ratio

of

> > output to input, i.e. "return", thus if the units of value of
> > input and output are the same, the ratio is unitless. A typical
> > Expected Value might be $0.01 or -$0.01, a typical Expected
> > Return might be 1.01 or 1%, or .99 or -1%.

deuceswild1000 wrote:
> Also a good answer. Better than in the FAQ

I respectfully disagree, on the latter count. I find that the

vpFREE

definitions of ER/EV are very practical.

"ER" is a very well defined term, as NOTI indicates. "EV" is very
problematic.

"EV" has no fixed meaning in the general world; it only has meaning
within a specific context. It is exactly what the term suggests --
it's the arithmetic average of values observed in a given situation.

You can speak of the EV for the number of cars crossing an
intersection in any given hour; or the EV for the number of

cigarettes

a slot player will smoke in a session (or the number of minutes
cigarettes will smolder during their session). EV can be defined

for

any situation in any manner. In order to use the term intelligently
in a discussion, a specific definition needs to be understood as a
standard by all participants.

In vp discussions, EV is generally interpreted to be a dollar value,
usually having one of two definitions:

- coin out (credits/$) for a period of play, or
- profit (credits/$), translate as "coin out - coin in", for a

period

of play.

Either of these two definitions is equally valid. I presume the the
Admin elected to go with "coin out" in the interest of avoiding
ambiguity, which I find acceptable.

However, I think "profit" would be a more accurate representation of
the general use of the term "EV" here. For example, we speak of
"positive" or "negative" EV games (where expected coin out > or <

than

coin in).

- Harry

Are EV and ER defined in vpFREE? All I found was how to maximize
them, but not really definition. I may not be looking in all of the
right places as some of it tends to be spread around.

If not then I think that what the two other posters mentioned were
better definitions.

If so, then, all I can say I always have a hard time finiding info on
this site.

Also, I did not see where NOTI showed any problematic aspoects of EV.

Lastly, Like cdfrules stated, I have always taken EV to be the
average of all events. Is that wrong, or did I sleep through stat
class?