Expected value The expected value of a random variable X,E[X],is the sum of all the possible outcomes of X weighted by each outcome's probability If the outcomes are x,x2,...,n,and the probabilities for each outcome are p1,p2,...,Pn respectively,then: E[X]=PX+p2X2+..+Pn Xn In our individual's case,the formula for expected value of income E[l]: [叮=pls+(1p)lH Bhattacharya,Hyde and Tu-HealthEconomics Bhattacharya, Hyde and Tu – Health Economics Expected value  The expected value of a random variable X, E[X], is the sum of all the possible outcomes of X weighted by each outcome’s probability  If the outcomes are x1 , x2 , . . . , xn , and the probabilities for each outcome are p1, p2 , . . . , pn respectively, then: E[X] = p1 x1 + p2 x2 + · · · + pn xn  In our individual’s case, the formula for expected value of income E[I]: E[I] = p IS + (1- p) IH