Expected Value

1. The concept regarding the expected and appropriate return on a wager in poker.
2. Also known in poker circles as "EV" and referenced as "+EV" meaning a positive expected value.

Example

A simple example is a bet made with a coin flip. If it comes tails, Player 1 gets $50. If it comes heads, Player 2 gets $1. Should Player 1 take this bet? Of course. There is a 50% chance of the coin landing on heads and a 50% chance of the coin landing on tails, therefore Player 1 has an expected win of $25 (0.50 * $50). If it lands on heads then player 1 forks over only $1 so his expected loss is $0.50 (0.50 * $1). The expected win ($25) minus the expected loss ($0.50) means that Player 1 in this wager has an expected profit of $24.50. Now, will Player 1 win $24.50? No, Player 1 will win either $25 or lose $1, however if the coin flip kept happening a million times the final profit for Player 1 would be very close to $24.5 million.