Expected Value Quotes

I'm always trying to calculate the mathematical probability of certain outcomes.

The bad player is the one who tries to calculate and play with the odds, as if his game, his life, were one of a large number of games. To do so is at best to succumb to another necessity, the necessity of large numbers. The good player does not fool himself, and accepts that there is exactly one chance, which produces by chance the necessity and even the purpose that he experiences.

Maybe we should teach schoolchildren probability theory and investment risk management.

The best practical advice then is: try to maximize your expected payoff, which is the sum of all payoffs multiplied by probabilities.

It is not necessary to have an entire certainty in regard to considerable goods and evils; mere possibility, and much more so probability, is sufficient to induce a reasonable person to deprive himself of some trifling good, and even to suffer some slight evil, with a design of acquiring a far greater good, and avoiding a more troublesome evil.

I failed math twice, never fully grasping probability theory. I mean, first off, who cares if you pick a black ball or a white ball out of the bag? And second, if you’re bent over about the color, don’t leave it to chance. Look in the damn bag and pick the color you want.

We tend to ignore the high probability of small gains or losses and focus on big payoffs or disaster despite remote odds.

About the only useful thing my economics degree taught me was that, in all decisions in life, you have to do a cost-benefit analysis.

Take the probability of loss times the amount of possible loss from the probability of gain times the amount of possible gain. That is what we're trying to do. It's imperfect, but that's what it's all about.

There is much evidence that people are not rational, in the economist’s sense; nor do they take into account expectation, in the precise interpretation of that word. As a result, economic theory often does not correspond with what happens in the market. Some would argue that we need descriptive economics. I would argue that all should be taught about probability, utility, and MEU (maximization of expected utility) and act accordingly.

It's the law of averages: put in more, come out with more.

If you call a hundred dollars but have a chance to win $10,000, those are excellent odds if you are at a table with people who have two aces or two kings. If you catch a flop you will get all their chips. I just play them because there is value.

If you want to maximize your expected utility, you try to save the world and the future of intergalactic civilization instead of donating your money to the society for curing rare diseases and cute puppies.

As the future is never known with certainty, the evaluation of the prospective benefits requires the formation of expectations. An acceptable house, partner or job, then, is one that offers an expected stream of future benefit that has a value in excess of the option to continue to search for an even better alternative.

Look, for some players, pot odds should guide your decision making.

Players talk about pot odds all the time, especially when they try to justify a call that they made. Whenever I hear this line of reasoning, though, I can't help but wonder if they properly thought through the consequences of their call.

Understand why casinos and racetracks stay in business - the gambler always loses over the long term.