Expected Value Essay Example | Topics and Well Written Essays - 2500 words

Expected Value - Essay Example This is because of the unpredictability of certain parameters which are associated with our planning. For example, in a cricket match, winning the toss has major role in deciding the victory. Most of the cricket pitches are underprepared which may favor either batting or bowling initially and then changes its characteristics later during the second innings. The toss winning captain can take decisions about whether to bat/ bowl first or to include pace bowlers or spinners in the team, based on the evaluation of the pitch. Many of the cricket teams underprepare their cricket pitches based on their strengths in batting and bowling. However, if they fail to win tosses, their planning cannot be implemented successfully. This is because of the fact that the chances of winning a toss are 50-50 since the coin has only two sides. In other words, the probability of getting a head or tail is 50-50. In such uncertain situations, the mathematical term â€Å"expected value† can help people in taking decisions. Expected value in mathematics is the weighted average of all the possible values. In other words, all the possibilities of a particular event will be evaluated properly while calculating the expected value. In industries and casinos, expected value has significant role to play. This paper analyses the history and importance of expected value. History of expected value The exact date of origination of the idea about expected value is still unknown to us. However, it is widely accepted that the expected value concepts were used during the latter half of the seventeenth century. Blaise Pascal, a French scientist and mathematician, is believed to be the founding father of the expected value theory. During the middle part of seventeenth century, the question of how to solve the problems of points or the problems of division of stakes raised major challenges to the mathematicians. Blaise Pascal and his associates started to solve these problems and the idea of expecte d value originated from their efforts. Even though, Pascal and his associates used different methods to solve this problem, they got same results since they used the same fundamental principle of mathematics in all their calculations. Apart from Pascal and his associates, a Dutch mathematician called Christian Huygens also contributed heavily to the development of expected value theory. Significance of expected value theory in casinos Expected value theory has greater significance in gambling. The chances of winning and losing in gambling depend on various parameters associated with the particular game selected for gambling. For example, poker is a game, which works on mathematical principles. Even though the nature and characteristics of the players play a vital role in deciding the winners of the poker game, many calculations including permutations and combinations are necessary to make sound decisions. For example, the right frequency to bluff in a situation is determined based o n the likelihood your opponent will fold in that particular situation. In limit, for example, when all the cards are out, how do you determine whether you should bluff on the river? If you can figure out that the pot is offering a caller 5:1 odds to call, but you know that they will fold the best hand 1 in six times, then bluffing now becomes mathematically correct (Importance of Math: expected value,