The Mean( also called Expected Value)
What is the expected value of discrete random variable?
An expected value is equal to the mean of the random
variable. It is the average of the values assumed by the random
variable in repeated trials of the experiment. In symbols,
μ = E(X) = X1P1 + X2P2 + . . . + XnPn
where P = probability of the value
X = possible outcomes
2
Example 1. Compute for the expected value if Mike has a 5
1
probability of gaining P13,500, 5 probabilty of gaining P10,000,
2
and 5 probability of losing P9,000.
Solution
2 1 2
E(X) = 5
( 13,500 ) + ( 10,000 ) + (−9,000 )
5 5
= 5,400 + 2,000 – 3,600
E(X) = P 3,800
The measure of the central location of a random variable is
called the expected value or mean of the random variable. It is
calculated as the weighted mean of the values where the weights
are their corresponding probabilities.
Example 2:
a) Let x be the number of heads obtained in tossing a coin.
Find the expected value of the number of heads.
X 0 1
P(x) 1/2 1/2
The expected value or mean of X is calculates as
. The mean of a random variable with a discrete probability
distribution
μ = Σ[x•P(x)] = E(X) or
μx = E(X) = x• P(x) = 0(1/2)+1(1/2) = ½
b) Suppose a die is tossed . Find the expected number of dots on
the upturned face of the die. Refer to the table below, the
probability mass function for the number of dots appearing on the
upturned face of the die is given by:
x 1 2 3 4 5 6
P(x) 1/6 1/6 1/6 1/6 1/6 1/6
The expected value or mean of X is calculates as
E[X] = 1.1/6 +2.1/6 + 3. 1/6 +4. 1/6 + 5.1/6 +6.1/6
= 21/6 or 7/2
c. Suppose that in a day, the probability of a car agent’s not
closing any deal is 0.35. On the other hand, the probability that
he/she can close one deal is 0.3; two deals, 0.25, and three
deals, 0.1. Find the agent’s expected number of closed deals in a
day.
Let X be the number of closed deals in a day.
X 0 1 2 3
P(x) 0.35 0.3 0.25 0.1
E[X] = 0(0.35) + 1(0.3) +2(0.25) + 3(0.1) = 1.1
Thus, the agent’s expected number of deals in a day is 1.1
There are cases that the expected value is negative. It means
that the person tends to lose than to gain.
Example 3: At a raffle, 2,000 tickets are sold at P100 each. The
prizes are P10,000, P5,000, P3,000, P2,000, and P1,000.
Catriona bought one ticket. What is the expected value of her net
gain?
If Catriona will spend P100, there is a chance that she might
lose. Her gain could be -100. But if she will win the first prize,
her gain could be 10,000-100 = 9,900. Do the same process to
second up to the last prize. Of the 2,000 tickets, only five prizes
will be given away. There are going to be 1,995 tickets that will
not win.
The probability that Catriona will lose is 1995/2000 = 0 9975.
Since only one person may win each prize is 1/2000 = 0.0005.
The probability distribution of the problem is as follows:
X -100 9900 4900 2900 1900 900
P(X=x 0.9975 0.0005 0.0005 0.0005 0.0005 0.0005
)
E(X) = Σx•P(x)
= 0.9975(-100) + 0.0005(9900)+ 0.0005(4900) +
0.0005(2900) +0.0005(1900)+ 0.0005(900)
= -89.5
Catriona can expect to lose P 89.50 for every raffle ticket that she
buys.
The Variance and Standard Deviation of a Random Variable
Most of the time, the values of the random variable are not
constant. Thus, it is important to say something about the
variations in the distribution. A measure of variability or the spread
of the values for a random variable X is the variance. It is
computed by getting the sum of the weighted squared differences
of the values from the expected value or mean.
The variance of the random variable X, denoted by σ 2x is
given by:
1. σ
2
= E( X
2
) – ¿¿
2. σx
2
= ∑ (x−μ)2• P(X) or σ
2
= ∑ (x−μ)2• P(X)
Another measure of variability for the random variable X
is the standard deviation. It
is computed by solving for the positive square root of
variance. Thus,
σ = √ Σ[( x−μ) P( x )]
2
Remember:
A large measure of variability means that the random
variable values are far from the expected value or mean.
A small measure of variability, on the other hand, means
that the values are close to the expected value or mean.
Example 4: Determine the variance of the probability
distribution given the table below.
X 0 1 2 3
P(X) 0.1 0.3 0.2 0.4
Solution
E(X) = 0(0.1)+ 1(0.3) +2(0.2) + 3(0.4) = 1.9
E X = 0(0.1) + 1 (0.3)+ 2 (0.2)+ 3 (0.4) = 4.7
2 2 2 2
σ
2
= 4.7 - (1.9) = 1.09
2
The standard deviation is √ 1.09 = 1.04
Example 7: The number of cars sold per day at a local
car dealership, along with its corresponding probabilities,
is shown in the succeeding table. Compute the variance
and the standard deviation of the probability distribution
by following the given steps.
Number of Cars Probability
Sold (x) P(x)
0 1/10
1 2/10
2 3/10
3 2/10
4 2/10
Solution:
Steps Solution
1. Find the mean Number Probabilit
of the probability of Cars y x•P(x)
distribution using Sold (x) P(x)
the formula 0 1/10 0
μ=Σ x • P(x)
1 2/10 2/10
2 3/10 6/10
3 2/10 6/10
4 2/10 8/10
μ=Σ x • P(x)= 22/10 or 2.2
2. Subtract the x P(x) x•P(x x- μ
mean from each )
value of the 0 1/10 0 0-2.2= -2.2
random variable x. 1 2/10 2/10 -1.2
2 3/10 6/10 -0.2
3 2/10 6/10 0.8
4 2/10 8/10 1.8
3. Square the
results obtained in x P(x) x•P(x) x- μ (x−μ)
2
step 2. 0 1/10 0 -2.2 4.84
1 2/10 2/10 -1.2 1.44
2 3/10 6/10 -0.2 0.04
3 2/10 6/10 0.8 0.64
4 2/10 8/10 1.8 3.24
4. Multiply the
results obtained by x P(x) x•P(x) x- μ 2
(x−μ)
2
(x−μ) • P(x)
the corresponding 0 1/10 0 - 4.84 0.484
probability. 2.2
1 2/10 2/10 - 1.44 0.288
1.2
2 3/10 6/10 - 0.04 0.012
0.2
3 2/10 6/10 0.8 0.64 0.128
4 2/10 8/10 1.8 3.24 0.648
5. Get the sum of
the results 2
σx = ∑ (x−μ) • P(X) = 1.56
2
obtained in step 4.
The result is the
value of the
variance. So, the
formula for the
variance is:
σ = ∑ (x−μ) • P(X)
2 2
x
[Link] the square σ = √ Σ[( x−μ) P( x )]
2
root of the = √ 1.56
variance to get the = 1.25
standard
deviation.