Decision Making and Expected Values -- Which project should be chosen
{"Image DocumentName": "Decision Making and Expected Values -- Which project should be chosen?", "Image ImageDescription": "Rules A project with a positive EV should be accepted. A project with a negative EV should be rejected. Choose an option or alternative which has the highest EV of profit (or the lowest EV of cost). Example 2: Project A Project B. Probability Profit EV Probability Profit EV___ , (2,000) (200) \u00a35, \u00a36,000. Solution: Project B has a higher EV of profit. This means that on balance of probabilities it could offer a better return than A and is so arguably a better choice. On the other hand the minimum return from project A would be \u00a35000. In addition with project B there is a small chance of making a loss. NOTES: Although it appears to be widely used for the purpose , the concept of EV is not particularly well suited to one off decisions. EV can strictly only be interpreted as the value that would be obtained if a large number of similar decisions were taken with the same ranges of outcomes and associated probabilities.", "Image XResolution": "37", "Image YResolution": "37", "Image ResolutionUnit": "Pixels/Centimeter", "Image Software": "SlidePlayer", "Image YCbCrPositioning": "Centered"}