Episode #44 - Thinking in Expected Value

In this episode, we level up your “bets” by introducing Expected Value thinking, a surprisingly simple yet powerful shift: multiplying upside by probability, subtracting downside by its likelihood, and comparing it across options. You’ll discover how low-probability, high-payoff moves can beat safe channels on paper, how “safe” choices can hide asymmetrical losses, and how portfolio thinking with EV tilts your actions toward real strategic value.References:1) Theory of Games and Economic Behavior: https://www.jstor.org/stable/j.ctt1r2gkx2) Decision Trees for Decision-Making: https://hbr.org/1964/07/decision-trees-for-decision-making3) Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Facts: https://www.goodreads.com/book/show/35957157-thinking-in-bets4) The Black Swan: The Impact of the Highly Improbable: https://www.goodreads.com/book/show/242472.The_Black_Swan5) The Risk and Return of Venture Capital: https://www.nber.org/system/files/working_papers/w8066/w8066.pdf6) Good Strategy / Bad Strategy: https://www.goodreads.com/book/show/11721966-good-strategy-bad-strategy7) Is Your Portfolio Ready for Higher Rates? https://www.bcg.com/publications/2024/developing-portfolio-strategy-in-a-high-rate-eraMusic Credit: Switch It Up, performed by Silent Partner, from the YouTube Studio Audio Library