📄️ Expected Value
Expected value (EV) is a fundamental concept in probabilistic thinking and decision-making. It involves quantifying the potential outcomes of various decisions by multiplying each outcome by its probability of occurring, then summing those results. By using expected value, you assess choices more systematically, focusing not just on potential rewards or risks individually, but on their weighted long-term outcomes.
📄️ Real Options
The concept of Real Options refers to making decisions in a way that preserves flexibility and optionality for the future. Borrowed from financial markets (where an "option" gives you the right but not the obligation to perform an action in the future), real options apply this thinking to real-life decisions—allowing you to adapt and respond effectively as new information arises.