MR.D.ID.A.7

Weigh the possible outcomes of a decision by assigning probabilities to payoff values and finding expected values. Evaluate strategies and make decisions based on expected values (for example, whether a team should pursue a higher-scoring option with a smaller probability of success or a lower-scoring option with a higher probability of success; whether a homeowner should file a small insurance claim given the probability that the monthly cost of insurance will rise as a result).

Example Problems
A fair coin is flipped 5 times. Let be the number of heads. What is the expected value of ?
In a game you roll a fair six-sided die. You receive (3 times the number showing) dollars minus 5 dollars. What is the expected payout?
A photocopier has a chance of breaking this month, which would cost to repair; otherwise, there is no repair cost. What is the expected repair cost for the month?
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