Description
Return expected lottery payoff and sure-equivalent gap.
Decision models distinguish monetary payoffs, probabilities, model values and subjective equivalents. Discounting, probability weighting and reference-dependent utility terms depend on supplied parameters and cannot by themselves establish actual preferences or an appropriate allocation.
Return expected lottery payoff and sure-equivalent gap.
When to use this tool
Use Lottery Sure Equivalent Gap when evaluating the stated decision-model, lottery or discount contribution.
How to use the tool and how it works
- Enter sureEquivalent, lotteryPayoffs, probabilities. Follow any array-alignment requirements below. Use the units and conventions below.
- Run the tool. Correct any format, range, or cross-field input error before interpreting the output.
- Read expectedPayoff, gap. Use the output convention below.
Return expected lottery payoff and sure-equivalent gap. Require aligned payoffs/probabilities, each probability in [0,1] and sum within 1e-12 of one; expectedPayoff is the dot product, gap = sureEquivalent-expected.1
| Input field | Meaning and units | Accepted input |
|---|---|---|
| sureEquivalent | Sure Equivalent | Required. Finite number. |
| lotteryPayoffs | Lottery Payoffs | Required. Array of finite number; maximum items 256. |
| probabilities | Probabilities | Required. Array of finite number; maximum items 256. |
| Output field | Interpretation | Returned shape |
|---|---|---|
| expectedPayoff | Expected Payoff | Required. Finite number. |
| gap | Signed difference under the stated comparison convention, with matching units. | Required. Finite number. |
{
"input": {
"sureEquivalent": 4,
"lotteryPayoffs": [
0,
10
],
"probabilities": [
0.5,
0.5
]
},
"output": {
"expectedPayoff": 5,
"gap": -1
}
}Limitations and assumptions
- Probabilities and equivalent are supplied; the result does not elicit utility, model probability weighting or recommend a real financial choice.
- Inputs must satisfy both the field types and the cross-field conditions above. Invalid input causes an error; a successful false flag or documented placeholder is a different result.
- Numeric calculations use binary floating point unless exact decimal-integer arithmetic is explicitly stated. No hidden measurement tolerance or decimal rounding is added; nonfinite or out-of-contract results are rejected. Numeric signed-zero results are exported as zero.
Alternative or Complementary methods
Fit and validate an appropriate complete decision model against relevant observations; distinguish model scores from money and assess actual financial choices separately.
References
Similar or alternative tools
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