expected-value-and-kellylisted

Activate when: user asks 'how much should I bet/invest on this?', 'what's the expected value here?', 'Kelly criterion', 'optimal bet size', 'fractional Kelly', 'how big a position should I take?', or is allocating capital across repeated decisions (ad spend by segment, VC portfolio construction, position sizing, A/B test ramp). Do NOT activate when: the decision is one-shot and non-repeating (career change, marriage) — use regret-minimization instead; or when the user cannot estimate probabilities or payoffs even roughly.
deciqAI/knowledge-skills · ★ 0 · AI & Automation · score 72

Install: claude install-skill deciqAI/knowledge-skills

# Expected Value and the Kelly Criterion ## Overview Two questions decide most repeated bets: **is this bet good?** (EV) and **how big?** (Kelly). Most professional ruin comes from positive-EV bets sized wrong. **EV = p · W − q · L.** If EV ≤ 0, do not bet. **Kelly f\* = (bp − q) / b** maximizes long-term geometric growth (Kelly, Bell Labs, 1956). Full Kelly requires casino-grade certainty; default to half- or quarter-Kelly for estimated edges. Neighbors: [first-principles](../first-principles/SKILL.md) · [occams-razor](../occams-razor/SKILL.md) · [second-order-thinking](../second-order-thinking/SKILL.md) · [inversion](../inversion/SKILL.md) · [regret-minimization](../regret-minimization/SKILL.md) (for non-repeating life decisions). ## When to Use - Decision **repeats many times** — capital allocation, position sizing, VC portfolio, ad spend, A/B test budget - *How big to bet* matters as much as *whether to bet*; you have a **measurable or estimable edge** - Someone says: "expected value," "EV," "Kelly," "optimal bet size," "how much should we put on this?" **When NOT to use:** one-shot life decisions → [regret-minimization](../regret-minimization/SKILL.md); negative-EV bets (don't bet); unestimable probabilities; correlated bets without portfolio adjustment. ## Coaching Novices (Adaptive Front Door) **Engine mode:** user has a concrete repeated bet → run The Process directly. **Coach mode:** user is unfamiliar → guide step by step. In Coach mode, respond one step at