ooteväärtus

Ooteväärtus, a term of Estonian origin, translates to "expected value" in English. It is a fundamental concept in probability and statistics, representing the average outcome of a random event if it were repeated many times. Mathematically, the expected value of a discrete random variable is calculated by summing the product of each possible value of the variable and its corresponding probability. For a continuous random variable, it is determined by integrating the product of the variable and its probability density function over its entire range.

The expected value is not necessarily one of the possible outcomes, but rather a weighted average that reflects the likelihood of each outcome. It plays a crucial role in decision-making, particularly in fields like finance, insurance, and gambling, where it helps assess the long-term profitability or risk associated with uncertain events. For instance, in a lottery, the expected value is typically negative for the player, indicating that on average, players will lose money. Conversely, insurance companies use expected value to set premiums that cover potential payouts and ensure profitability. Understanding ooteväärtus is essential for quantifying and managing risk in probabilistic scenarios.