Mental modelUse the model to simplify a difficult commitment decision. It is a lens, not a substitute for evidence.

The model

A large contract is not automatically attractive if the downside scenarios are both plausible and expensive. Expected value combines the size of outcomes with their likelihood.

Use simple ranges

You do not need false precision. Compare a base case, a credible downside and an upside. Identify which term or assumption moves the result most.

Why it matters

A strategic deal may still justify weak standalone economics, but leadership should make that choice with the downside visible.

Do not confuse expected value with certainty

The model helps structure uncertainty. It does not eliminate it.

A big number at the top of the deal is not the same as a good economic decision.