odotusarvoteoria
Odotusarvoteoria is a concept in probability and decision theory that centers on the idea that the value of a random outcome can be assessed by its expected value—the probability-weighted average of possible outcomes. In decision making, the theory is often used to evaluate bets, forecasts, and investments under conditions of uncertainty, particularly under the assumption of risk neutrality.
Definition and math: For a discrete random variable X with outcomes x_i and probabilities p_i, the expected
Relation to other theories: Odotusarvoteoria is related to, but distinct from, expected utility theory. While odotusarvoteoria
Applications and limitations: It is used in insurance pricing, investment analysis, forecasting evaluation, and quality control.
History: The idea traces back to early probability pioneers and was formalized within the broader framework