Expected Value
Expected Value (EV) is a mathematical framework for decision-making under uncertainty that calculates the probability-weighted average of all possible outcomes. By making the implicit trade-offs in any risky decision explicit and quantitative, EV provides a principled basis for comparing investments, bets, and choices across different probability and payoff profiles — even when no single outcome is guaranteed. It is the foundation of rational decision-making in investing, game theory, and any domain where outcomes are uncertain.