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Expected Value

quote

You can now use your probability estimates to get an expected value for each contractor, by multiplying through each potential outcome's probability with its cost, and then summing them all up. This resulting summed value is what you would expect to pay on average for each contractor, given all the potential outcomes.

From

Chapter:

Decisions, Decisions

Section:

Taming Complexity

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Anecdotal evidence
Correlation Does Not Imply Causation
Confounding Factor
Hypothesis
Texas Sharpshooter Fallacy
Randomized Controlled Experiment
A/B Testing
Observer-Expectancy Bias
Placebo Effect
Proxy
Selection Bias
Survivorship Bias
Response Bias
Law Of Large Numbers
Gambler's Fallacy
Clustering Illusion
Regression To The Mean
Median
Mode
Variance
Standard Deviation
Normal Distribution
Probability Distribution
Central Limit Theorem
Confidence Interval
Conditional Probability
Base Rate Fallacy
Bayes' Theorem
Frequentist
Bayesian
False Positive
False Negative
Power
Nuyll Hypothesis
Statistical Significance
P-Value
Replication Crisis
Data Dredging
Publication BIas
Systematic Review
Meta-Analyses
Pro-Con List
Maslow's Hammer
Cost-Benefit Analysis
Inflation
Sensitivity Analysis
Garbage In, Garbage Out
Decision Tree
Expected Value
Utility Values
Utilitarianism
Black Swan Events
Fat-Tailed Distributions
Systems Thinking
Chatelier's principle
Hysteresis
Monte Carlo Simulation
Local Optimum
Global Optimum
Unknown Unknowns
Scenario Analysis
Thought Experiment
Counterfactual Thinking
Lateral Thinking
Groupthink
Bandwagon Effect
Divergent Thinking
Convergent Thinking
Crowdsource
Prediction Market
Superforecasters
Business Case
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