Expected monetary value; EMV) Expected monetary value, also known as risk exposure value and risk expectation value, is a quantitative risk analysis technique, which is often used with decision trees. It multiplies the monetary consequences of possible risks in a specific situation by the probability of occurrence. This project includes consideration of risk and cash.

Positive values indicate opportunities, and negative values indicate risks.

The numerical value of each possible result is multiplied by the probability of occurrence, and then added.

Is it rational to make decisions based on this?

Optimal decision-making is not infeasible, however, social reality is not equal to theoretical assumptions, and the assumptions of rational decision-making model encounter many obstacles, and people gradually find that many phenomena in policy practice are difficult to explain. The reason lies not in its logical system, but in its premise assumption. So it has been strongly criticized by many scholars. The most prominent are Charles Lindblom and herbert simon. Linde blom pointed out: Policymakers are not faced with a given problem, but must first find out and explain it. What's the problem? Different people will have different understandings and opinions. For example, the rapid rise in prices needs to respond to inflation.

First of all, it is often very difficult to find out the crux of this problem. Because different interest representatives will look at these issues from their own interests, people will have different answers around whether inflation exists, if so, what is its degree and influence, and what is the reason for inflation.

Secondly, decision makers are influenced by values, and value conflicts often occur when choosing schemes. It is extremely difficult to compare, measure and judge right and wrong in value conflicts. The contradiction of values cannot be solved by analysis, because analysis cannot prove people's values, and it is impossible to unify people's values by administrative orders.

Thirdly, some people think that "public interest" can be used as a decision-making standard. Linde blom criticized this understanding, arguing that there is no general consensus on what constitutes public interest, and public interest does not mean unanimously agreed interest.

Fourth, correlation analysis in decision-making is not omnipotent. Decision-making is limited by time and resources. For complex decisions, we will not make endless or even long-term analysis, nor will we spend too much money on analysis, or wait until all the analysis is done before making a decision, otherwise we will delay the opportunity.

Simon further added that it is impossible to collect all the information related to the decision-making situation during the decision-making process.

For reference.