Calculate Expected Monetary Value — the probability-weighted average of the monetary value of all possible outcomes — for a single decision, compare two alternatives, and compute EVPI (Expected Value of Perfect Information). Runs 100% in your browser; no data is sent anywhere.
| Outcome | Probabilitas (%) | Payoff |
|---|
A decision has three outcomes: 50% gain Rp100,000, 30% gain Rp50,000, 20% loss Rp20,000.
EMV = (0.50 × 100,000) + (0.30 × 50,000) + (0.20 × −20,000) = 50,000 + 15,000 − 4,000 = Rp61,000.
Enter the outcome list (probability + payoff) for each alternative. The calculator computes both EMVs, their difference, and states which alternative has the higher EMV mathematically.
| Outcome | Prob. (%) | Payoff |
|---|
| Outcome | Prob. (%) | Payoff |
|---|
EVPI measures the upper bound of what is mathematically worth paying for information that removes all uncertainty before the decision is made. Fill the payoff table: rows = states (future conditions), columns = decision alternatives.
Two states: good market (60%) and bad market (40%). Invest alternative: payoff Rp200,000 if good, −Rp100,000 if bad. Hold alternative: Rp0 in both states.
EMV Invest = (0.6 × 200,000) + (0.4 × −100,000) = 120,000 − 40,000 = Rp80,000. EMV Hold = Rp0. Best without info = Rp80,000.
With perfect info: if good, choose Invest (200,000); if bad, choose Hold (0) → (0.6 × 200,000) + (0.4 × 0) = Rp120,000.
EVPI = 120,000 − 80,000 = Rp40,000.
| Outcome | Meaning |
|---|---|
| EMV > 0 | Positive expected value: the probability-weighted average outcome is monetarily favorable. It does not mean every occurrence is profitable — individual outcomes can lose money. |
| EMV = 0 | Expected break-even: the possible gains and losses cancel each other out on average. |
| EMV < 0 | Negative expected value: the probability-weighted average outcome is monetarily unfavorable. |
| EVPI = 0 | Perfect information does not change the best decision — there is no point paying for additional information in this model. |
| EVPI > 0 | Upper bound of the value of perfect information. Paying more than EVPI for information cannot be justified by this model. |
| Probabilitas ≠ 100% | Invalid input: all probabilities in one calculation must sum to exactly 100%. |
Expected Monetary Value (EMV) is the probability-weighted average of all monetary values a decision might produce, where each outcome is multiplied by its probability of occurring. EMV is used to compare options when outcomes are uncertain, for example choosing between two projects with different chances of profit and loss.
EMV = the sum of (probability × payoff) over every possible outcome. Probabilities are written as decimals (50% = 0.50) and all probabilities must sum to 100%. Payoffs can be positive (gains) or negative (losses).
The math is the same: expected value is the general statistics term for the probability-weighted average of a random variable. EMV is the application of that term in decision-making, where the variable is the monetary value (monetary payoff) of each option.
Expected Value of Perfect Information (EVPI) is the difference between the EMV if you knew the exact future conditions before deciding, and the best EMV achievable without that information. EVPI gives the upper bound of what is mathematically worth paying for perfect information.
EMV assumes a risk-neutral decision maker, meaning an uncertain Rp1 million is valued the same as a certain Rp1 million. If you avoid risk, this assumption does not fit and decision literature uses expected utility, which accounts for risk preferences. EMV is also unsuitable when the probabilities cannot be honestly estimated.
An EMV calculation is not valid when the probabilities do not sum to exactly 100%, because the formula is a complete weighted average. Recheck your estimates, or use the normalize button on the calculator to scale the probabilities proportionally to 100%.
Yes. A negative payoff represents a loss or cost on that outcome; for example, −Rp100,000 means that scenario loses Rp100,000. Total EMV can be negative when the possible losses outweigh the possible gains.
No. EMV is an expected value — the average that would emerge if similar decisions were repeated many times over the long run. In a single real occurrence, the actual result can be far above or below EMV. EMV helps compare options, not predict the future.
Free tool by NRTechStudio
Explore similar finance tools and calculators. 100% free, accurate, and runs completely in your browser without sign-up.
2 taps, no typing needed — diagnostics are sent automatically.