To calculate the expected monetary value of each bet, you look at all the possible outcomes of that bet. For each outcome, you take the monetary gain or loss and multiply it by the probability of the outcome. In this case, there are two possible outcomes, Heads and Tails. Each has a 50% chance of occurring. The expected monetary value of taking the bet is therefore (50% × +$2) + (50% × −$1) = $0.50. The expected monetary value of refusing the bet is $0. Taking the bet has the higher expected value, so you should take the bet.
