expected_value: Calculate the expected values from a bet
In AlexB4891/phenomenology: What the Package Does (One Line, Title Case)

View source: R/uncertainty.R

expected_value

R Documentation

Calculate the expected values from a bet

Description

A fair bet is the one which leads to a expected value equal to cero. Someone who is unwilling to make a fair bet is risk averse. A person who is indifferent about making a fair bet is risk neutral. A person who is risk preferring will make a fair bet. (Perloff J. M., 2020)

Usage

expected_value(
  earnings = c(),
  losings = c(),
  probabilities = c(),
  endowment = 0
)

Arguments

`earnings`	value you get if you win the bet
`losings`	value you loose if you do not win the bet
`probabilities`	set of probabilities for the options of the bet (the order should be as follows c(earnings,losings) )
`endowment`	Initial endowment