Suppose that for X = net amount won or lost in a lottery game, the expected value is E(X) = -$0.50. What is the correct interpretation of this value?
A) The most likely outcome of a single play is a net loss of 50 cents.
B) A player will have a net loss of 50 cents every single time he or she plays this lottery game.
C) Over a large number of plays the average outcome for plays is a net loss of 50 cents.
D) A mistake must have been made because it's impossible for an expected value to be negative

Question

Quizplus · Accepted Answer

The expected value of a game represents the average outcome over a large number of trials, not the outcome of a single trial or every single trial. Negative expected values are common in gambling scenarios, indicating a net loss over time.

Suppose That for X = Net Amount Won or Lost