vpFREE2 Forums

EV Vs. ER

#1

I was surprised to find that the second example in the wikipedia definition of Expected_value looks very much like vpFREE's use of EV.

vpFREE: EV = ER x coin-in

wiki example #2: "the expected value of the profit resulting from a dollar bet on a single number" (in roulette)

E(X) = (-$1x37/38) + ($35 x 1/38) = -$1/19 = -$0.0526

Looks an awful lot like vpFREE's EV. Can't say the same for wiki's Expected_return, but the entry is scant.

JD

cdfsrule wrote:

···

----- Original Message ----

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

#2

Yes, yes yes!!! Wikipedia gives the units of their computation: the EV for a $1 bet is... get
this... in dollars! And the EV for a single coin bet is... in coins. And the EV for the
probability of winning is... hold on... in probability units (like percentage). And finally the EV
for a roll of a standard 6 sided die-- the first wikipedia example-- is in-- what ever units
the number on the side are in-- not dollars or coins or percentage-- 3.5 !

As for the ER page there, the computation ascribed to ER is exactly the same as the one
ascribed to EV.

Looks an awful lot like vpFREE's EV. Can't say the same for wiki's Expected_return, but the

entry is scant.

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--- In vpFREE@yahoogroups.com, John Douglass <john.douglass@...> wrote:

JD

#3

As for the ER page there, the computation ascribed to ER is exactly

the same as the one

ascribed to EV.

I'll take another shot at it.

Expected Return is well defined for slot machines: average
coin-out/coin-in.

Expected Return is well defined for financials: average sales
price/purchase price.

Expected Value is well defined in mathematics: the weighted average or
mean value, or as I think cdf put it, the first moment of the pdf.

And, I would say, given these, both terms are well defined in the FAQ:

EV = [ER] X [coin-in]

The expected return of FPDW is about 100.77%, therefore the expected
value of $100 coin-in is $100.77 .

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

#4

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

> As for the ER page there, the computation ascribed to ER is

exactly

the same as the one
> ascribed to EV.

I'll take another shot at it.

Expected Return is well defined for slot machines: average
coin-out/coin-in.

Expected Return is well defined for financials: average sales
price/purchase price.

Expected Value is well defined in mathematics: the weighted average

or

mean value, or as I think cdf put it, the first moment of the pdf.

And, I would say, given these, both terms are well defined in the

FAQ:

EV = [ER] X [coin-in]

I agree that that formula tells the results but it does not define
the terms. My point is the FAQ should have both a definition and a
formula

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

#5

See message #92117, which is in this thread:

http://groups.yahoo.com/group/vpFREE/message/92117

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On 30 Aug 2008 at 5:38, deuceswild1000 wrote:

I agree that that formula tells the results but it does not define
the terms. My point is the FAQ should have both a definition and a
formula

#6

Thank you, I guess I missed 92117 that is why I posted 92185 and since
I did not get a response, I posted 92210.

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

On 30 Aug 2008 at 5:38, deuceswild1000 wrote:

> I agree that that formula tells the results but it does not define
> the terms. My point is the FAQ should have both a definition and a
> formula

See message #92117, which is in this thread:

http://groups.yahoo.com/group/vpFREE/message/92117