# Week 2: Expected Value

Part of:
Practical Decision-Making
Instructor:
Matt Freeman

Before our class session, please watch the video below for an overview of the subject matter we will be discussing, and familiarize yourself with the background materials linked below.

This week our goal is to expand our prediction and forecasting skills by attacking more complex problems, and practicing the specific narrow mental abilities that will sharpen our predictive powers.

No reading is required, but transcripts of the main YouTube videos are available under the Supplemental materials.

### Lectures

• Prediction and Calibration will convey the best practices for making complex and confusing predictions under uncertainty
• Expected Value discusses a fundamental technical concept we will be using for the remainder of the course.

### Homework

• Make a free account on Guesstimate. Try your hand at estimating the mass of the largest elephant ever recorded. Consider using Guesstimate for your Metaculus predictions.
• Continue to make predictions on Metaculus. Try to incorporate Guesstime to help think through your predictions. Remember, you’re encouraged to collaborate with your cohort to achieve the best average score.
• What is the expected value of a $1 Powerball lottery ticket if the jackpot is$150,000,000? Use only the information in this table.

### Cohort

#### General

• Try to keep discussions on topic.
• If students have questions for the instructor, directly contact the instructor with the question. The instructor may not be able to reply immediately, so try not to let the question hold up further discussion.
• When leading a discussion, tap individuals to speak rather than waiting for someone to jump in first. Over the course of the session, try to vary who speaks first.

#### This week

• (20 minutes) Lead a discussion on Metaculus. Ask the students which questions they made predictions on, and how they approached the process. Encourage them to show any Guesstimate trees they may have made. Pass along any difficulties or confusions to the instructor.
• (30 minutes) Collect everyone’s estimate for the weight of the largest elephant ever recorded, and discuss Fermi estimates in general. Encourage everyone to describe their approach to the elephant question. Pass the results along to the instructor. The cohort with the closest mean estimate is victorious.
• (10 minutes) Discuss the answer key for the Powerball lottery problem, and invite people to share their confusions and problems.

### Optional

• At least once this week, try to resolve or clarify an argument by using a prediction or bet.
• This week, get into the habit of making friendly bets with other Guild members.