INTRODUCTION TO ECONOMETRICS II
ECO 306
NOUN
20
X
P
X P
2
3
4
5
6
7
8
9
10
11
12
( ) ∑
In the case of the two dice, the values
…
were the numbers 2 … 12:
= 2,
=
3...
=12, and
=
,
=
=
. As shown in table 1.0, the expected value is
7. Also, the expected value of a random variable is described as population mean. In the case of the random variable X, the population mean is given as
1.1.3.3 Expected value rules
There are three main rules of expected values that are equally valid for both discrete and continuous random variables. These are
Rule 1: The expected value of the sum of several variables is equal to the sum of their respective expected values. For example, if you have three random variables X, Y, and
Z,
( ) ( ) ( ) ( )
…[1.02]
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