← Thinking in Odds · Lesson 4 of 6
A fair price
A library sells 500 raffle tickets at $2 each for a $500 prize. What is one ticket worth, on average?
Across all 500 tickets, the library pays out $500, so each ticket carries $1 of prize on average. You pay $2 for $1 of expected prize — on average you give $1 to the library. That is the expected value: the average outcome over many repeats.
That is fine for a fundraiser; you are paying for a good cause and a little fun. Expected value is not a rule about what to do. It is a way of seeing clearly what a price buys, so the choice is yours with your eyes open.
A game costs $3 to play. One time in four you win $8; otherwise nothing. On average, per play, you…
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