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Home>5.3ExpectedValueofaDiscreteRandomVariable

5.3ExpectedValueofaDiscreteRandomVariable
ExpectedValue(i.e.,Mean)ofaDiscreteRandomVariable
LawofLargeNumbers:Givenalargenumberofrepeatedtrials,theaverageoftheresultswillbeapproximatelyequaltothe
expectedvalue
Expectedvalue:Themeanvalueinthelongrunformanyrepeatedsamples,symbolizedasE(X)

ExpectedValueforaDiscreteRandomVariable
E(X) = xi p i

=valueoftheithoutcome
th
p i =probabilityofthei outcome
xi

Accordingtothisformula,wetakeeachobservedXvalueandmultiplyitbyitsrespectiveprobability.Wethenaddtheseproductsto
reachourexpectedvalue.Youmayhaveseenthisbeforereferredtoasaweightedaverage.Itisknownasaweightedaverage
becauseittakesintoaccounttheprobabilityofeachoutcomeandweighsitaccordingly.Thisisincontrasttoanunweightedaverage
whichwouldnottakeintoaccounttheprobabilityofeachoutcomeandweigheachpossibilityequally.
Let'slookatafewexamplesofexpectedvaluesforadiscreterandomvariable:

Example

Afairsixsideddieistossed.Youwin$2iftheresultisa1,youwin$1iftheresultisa6,butotherwise
youlose$1.
TheProbabilityDistributionforX=AmountWonorLost
X

+$2

+$1

$1

Probability

1/6

1/6

4/6

E(X) = $2(

1
6

) + $1(

1
6

) + ($1)(

4
6

) = $

1
6

= $0.17

Theinterpretationisthatifyouplaymanytimes,theaverageoutcomeislosing17centsperplay.Thus,overtimeyoushould
expecttolosemoney.

Example

Usingtheprobabilitydistributionfornumberoftattoos,let'sfindthemeannumberoftattoosperstudent.
ProbabiltyDistributionforNumberofTattoosEachStudentHasinaPopulationofStudents
Tattoos

Probability

.850

.120

.015

.010

.005

E(X) = 0(.85) + 1(.12) + 2(.015) + 3(.010) + 4(.005) = .20

Themeannumberoftattoosperstudentis.20.

SymbolsforPopulationParameters

RecallfromLesson3,inasample,themeanissymbolizedby
x andthestandarddeviationbys.Becausetheprobabilitiesthatwe
areworkingwithherearecomputedusingthepopulation,theyaresymbolizedusinglowercaseGreekletters.Thepopulationmean
issymbolizedby (lowercase"mu")andthepopulationstandarddeviationby (lowercase"sigma").

Sample
Statistic

Population
Parameter

Mean

Variance

Standard
Deviation

Alsorecallthatthestandarddeviationisequaltothesquarerootofthevariance.Thus,

2
= ( )

StandardDeviationofaDiscreteRandomVariable
Knowingtheexpectedvalueisnottheonlyimportantcharacteristiconemaywanttoknowaboutasetofdiscretenumbers:onemay
alsoneedtoknowthespread,orvariability,ofthesedata.Forinstance,youmay"expect"towin$20whenplayingaparticulargame
(whichappearsgood!),butthespreadforthismightbefromlosing$20towinning$60.Knowingsuchinformationcaninfluenceyou
decisiononwhethertoplay.
Tocalculatethestandarddeviationwefirstmustcalculatethevariance.Fromthevariance,wetakethesquarerootandthisprovides
usthestandarddeviation.Conceptually,thevarianceofadiscreterandomvariableisthesumofthedifferencebetweeneachvalue
andthemeantimestheprobilityofobtainingthatvalue,asseenintheconceptualformulasbelow:

ConceptualFormulas
VarianceforaDiscreteRandomVariable

= [(xi ) p i ]

StandardDeviationforaDiscreteRandomVariable

2
= [(xi ) p i ]

=valueoftheithoutcome
= E(X) = xi p i
th
p i =probabilityofthei outcome
xi

IntheseexpressionswesubstituteourresultforE(X)into because isthesymbolusedtorepresentthemeanofapopulation.

However,thereisaneasiercomputationalformula.Thecompuationalformulawillgiveyouthesameresultastheconceptualformula
above,butthecalculationsaresimplier.

ComputationalFormulas
VarianceforaDiscreteRandomVariable

= [(x p i )]

StandardDeviationforaDiscreteRandomVariable

= [(x p i )]
i

=valueoftheithoutcome
= E(X) = xi p i
th
p i =probabilityofthei outcome
xi

NoticeinthesummationpartofthisequationthatweonlysquareeachobservedXvalueandnottherespectiveprobability.Alsonote
thatthe isoutsideofthesummation.

Example
Goingbacktothefirstexampleusedaboveforexpectationinvolvingthedicegame,wewouldcalculatethestandard
deviationforthisdiscretedistributionbyfirstcalculatingthevariance:
TheProbabilityDistributionforX=AmountWonorLost
X

+$2

+$1

$1

Probability

= [ x p i ]

= [

4
6

1
6

4
6

1
36

= [2 (

53
36

1
6

1/6

) + 1 (

1
6

1/6

) + (1) (

4
6

)] (

1
6

4/6

= 1.472

Thevarianceofthisdiscreterandomvariableis1.472.

2
= ( )

= 1.472 = 1.213

Thestandarddeviationofthisdiscreterandomvairableis1.213.

VideoReview:WorkingWithDiscreteRandomVariables
Thisvideowalksthroughoneexampleofadiscreterandomvariable.Itincludestheconstructionofacumulativeprobability
distributionandthecalculationofthemeanandstandarddeviation.

Discrete Random Variable Example

SourceURL:https://onlinecourses.science.psu.edu/stat200/node/36