Part of the expected value is estimating the chance or probability of the situation.

Many people have poor judgement calculating real probabilities. They overstate the chance of rare events and underestimate the possibility of common events.

For example, many people don't like to fly on planes because they are scared they might be in a crash, yet the actual chance is close to zero.

Risk is part of our lives and cannot always be avoided. We have to cross streets or drive in cars.

When we are faced with a risky situation, we can make a better choice when we consider the odds as well as the payoff.