Expected Value
Definition
The expected value of a random variable is the average value we would expect to obtain if we repeated an experiment many times.
Analogy
Imagine playing a game where you roll two dice. Each number rolled has its own payout. The expected value is like calculating how much money you would win on average if you played this game many times.
Related terms
Variance: Variance measures how spread out the values of a random variable are from its expected value.
Standard Deviation: Standard deviation is the square root of variance and provides another measure of how spread out the values are.
Law of Large Numbers: The law of large numbers states that as more observations are collected, the average outcome will converge to the expected value.
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