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#1
August 25th, 2010, 03:58 PM
 sagefr0g Executive Member Join Date: Apr 2006 Posts: 5,141
average & expected value

can anyone give an explanation of the essential difference between a simple average (say of a huge set of data) and expected value?

if i know some average value, is there a way to view that as expected value or convert it to expected value?

edit: like ok, say i play some simple game, and i play it billions of times. say of all the money i make and lose that the average is \$8 from all those billions of plays.
could i say that \$8 is my expected value for that game?

Last edited by sagefr0g; August 25th, 2010 at 04:12 PM.
#2
August 25th, 2010, 04:26 PM
 assume_R Executive Member Join Date: Dec 2009 Posts: 856

From: http://en.wikipedia.org/wiki/Expected_value

"To empirically estimate the expected value of a random variable, one repeatedly measures observations of the variable and computes the arithmetic mean of the results. "

Essentially, to calculate the EV, you take each value (such as +\$2), and the probability of that occurring (such as 10%), and multiply (\$0.20). Then you take your next value (such as +\$3) and the probability of that occurring (such as 90%) and multiply (\$2.70). Adding all that up gives you the EV, or \$2.90.

Alternatively, you can run a billion simulations, and the mean will be very close to \$2.90. This is because about 900 million times you will win \$3 (so you get \$2.7 billion), and about 100 million times you will win \$2 (so you get \$0.2 billion). Your total money will be \$2.9 billion, and when you divide by your billion rounds (to get the mean, or average), you get \$2.90.

Does that explain it enough for you or was that confusing?
#3
August 25th, 2010, 04:39 PM
 Sucker Executive Member Join Date: Feb 2009 Location: U.S.A. Posts: 1,504

Quote:
 Originally Posted by sagefr0g like ok, say i play some simple game, and i play it billions of times. say of all the money i make and lose that the average is \$8 from all those billions of plays. could i say that \$8 is my expected value for that game?
Yes. Your expected value IS your average. If you have a 1% advantage and bet \$100, your expected value is \$1 per bet, which means that you will average \$1 for every \$100 bet.
#4
August 25th, 2010, 05:24 PM
 sagefr0g Executive Member Join Date: Apr 2006 Posts: 5,141

Quote:
 Originally Posted by Sucker Yes. Your expected value IS your average. If you have a 1% advantage and bet \$100, your expected value is \$1 per bet, which means that you will average \$1 for every \$100 bet.
ahh, ok, thank you very much.

so, it's obvious you really do want to have billions of trials (at least in a lot of cases) so as to come up with the best value, sorta thing. while maybe keeping in mind the problem of standard error.

and so when it comes to variance, i believe one could get that from the raw data by taking the average of the squared differences from the mean, sorta thing?
then take the square root of that to get standard deviation?
again for most cases one would need a large number of trials, sorta thing.
and i guess this is all assuming that the data in question fits a normal distribution, bell curve, sorta thing?

but really i was just wondering if a simple average is pretty much the same thing as expected value, in the case i mentioned.
so are there situations where an average wouldn't fit the bill for expected value? errhh well i guess one case would be where not enough data is used to overcome standard error, maybe?
#5
August 25th, 2010, 05:42 PM
 blackjack avenger Executive Member Join Date: Feb 2007 Posts: 2,267
There is EV and EV and EV

I think we most commonly look at EV per hour.
We can also look at it per hand.

However, as we know the variance of that one hand or one hr can be staggering.

Now, if one had an idea of the length of their career then one could come up with an EV for their career or perhaps many hours played, and this number would have more meaning because the variance would be less of a factor.

Perhaps EV per NO
or
EV per 4NO if you resize bank based on wins and losses

The devil is in the variance

Last edited by blackjack avenger; August 25th, 2010 at 05:46 PM. Reason: Because Traffic is Bad on the Highway
#6
August 25th, 2010, 10:34 PM
 psyduck Executive Member Join Date: Aug 2009 Posts: 707

This is confusing. I thought EV means advantage based on initial bet, not hourly win in \$.
#7
August 25th, 2010, 10:56 PM
 Sucker Executive Member Join Date: Feb 2009 Location: U.S.A. Posts: 1,504

Quote:
 Originally Posted by psyduck This is confusing. I thought EV means advantage based on initial bet, not hourly win in \$.
You are exactly right. In order to obtain hourly win in \$, you have to multiply EV by hands per hour. Obviously, depending upon the dealer, how full the table is, whether or not you play one or two boxes, etc.; your hourly win rate will vary tremendously.
#8
August 26th, 2010, 01:54 AM
 blackjack avenger Executive Member Join Date: Feb 2007 Posts: 2,267
A Bit Dated but Still Has it's Uses

Quote:
 Originally Posted by psyduck This is confusing. I thought EV means advantage based on initial bet, not hourly win in \$.
Yes, it does mean that
but
before SCORE and score came about one would talk of hourly EV
Also, this would still have meaning if your bank is bigger then 10g or you don't bet optimally.
How much do you make an hour. What is your Expected Value for an hour's play or multiple hours or weekly, monthly or NO etc.

Last edited by blackjack avenger; August 26th, 2010 at 02:00 AM.
#9
August 26th, 2010, 04:20 PM
 k_c Executive Member Join Date: May 2007 Posts: 624

Quote:
 Originally Posted by sagefr0g can anyone give an explanation of the essential difference between a simple average (say of a huge set of data) and expected value? if i know some average value, is there a way to view that as expected value or convert it to expected value? edit: like ok, say i play some simple game, and i play it billions of times. say of all the money i make and lose that the average is \$8 from all those billions of plays. could i say that \$8 is my expected value for that game?
If you sim a \$1 bet on each of 1 billion rounds and when done you are +\$8 then according to the sim EV in percent = 8/1,000,000,000*100 = .0000008% = ~0% = ~break even bet.

Ev is the amount in percent (or can be expressed as fraction) of bet that is expected to be added to (+EV) or subtracted from (-EV) bankroll as a result of one round.

However one must remember that the result for any given round = DidddlySquat(r), where DiddlySquat() is an array of unreliable numbers and r = round number. Assuming the sim is properly set up, though, EV can be obtained from the DiddlySquat array by summing the elements and dividing by total number of rounds.

For a 1 billion round sim:
EV = (DiddlySquat(1)+DiddlySquat(2)+.......+DiddlySquat (999999999)+DiddlySquat(1000000000))/1000000000

Instead of a sim EV could possibly be calculated with more accuracy using combinatorial analysis, thus eliminating the need for the DiddlySquat array.

#10
August 26th, 2010, 06:55 PM
 sagefr0g Executive Member Join Date: Apr 2006 Posts: 5,141

Quote:
 Originally Posted by k_c If you sim a \$1 bet on each of 1 billion rounds and when done you are +\$8 then according to the sim EV in percent = 8/1,000,000,000*100 = .0000008% = ~0% = ~break even bet. Ev is the amount in percent (or can be expressed as fraction) of bet that is expected to be added to (+EV) or subtracted from (-EV) bankroll as a result of one round. However one must remember that the result for any given round = DidddlySquat(r), where DiddlySquat() is an array of unreliable numbers and r = round number. Assuming the sim is properly set up, though, EV can be obtained from the DiddlySquat array by summing the elements and dividing by total number of rounds. For a 1 billion round sim: EV = (DiddlySquat(1)+DiddlySquat(2)+.......+DiddlySquat (999999999)+DiddlySquat(1000000000))/1000000000 Instead of a sim EV could possibly be calculated with more accuracy using combinatorial analysis, thus eliminating the need for the DiddlySquat array.
hmm ok, caught that on the part where you are saying what ev is, is how it is a expectation to add or subtract to the bankroll on a play by play sorta basis.

so that makes me think i didn't frame the situation correctly.
lemme try a whole new scenario, please.

like, say someone says to me that they know of a play for which over time as you make the play you will find that the average amount won is \$8 for a given play.
and let us say that person also claims to have tested this play billions of times.
so the question is, would i be correct in considering the expected value of that play to be ev = \$8 ?

Last edited by sagefr0g; August 26th, 2010 at 07:23 PM. Reason: change part in blue from everytime to for which over time

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