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Expected Overall Value

<p><b>CONTENT</b>: This week will cover chance and choice—in other words, probability and decision making. Probability is useful for measuring the strength of inductive arguments and also for deciding what to believe and what to do. You will learn about the nature and kinds of probability along with four simple rules for calculating probabilities. An optional honors lecture will then explain Bayes’ theorem and the common mistake of overlooking the base rate. Next we will use probabilities to evaluate decisions by figuring their expected financial value and contrasting financial value with overall value. </p><p><b>LEARNING OUTCOMES</b>: By the end of this week’s material, you will be able to do: <ul><li> solve some classic paradoxes of probability</li><li>apply simple rules of probability</li><li>use Bayes’ theorem to calculate conditional probabilities</li><li>avoid fallacies of probability</li><li>apply probabilities to calculate expected financial values</li><li>distinguish financial value from overall value</li><li>use simple rules to aid decisions under uncertainty</li></ul></p><p><b>OPTIONAL READING</b>: If you want more examples or more detailed discussions of these topics, we recommend<em> Understanding Arguments, Ninth Edition</em>, Chapters 11 and 12

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