The Uncomfortable Forecast
Beyond the headline number. Elena presents an investment's expected $2.0M profit alongside its full range of outcomes, from −$1.0M to $6.0M. Dr. Bayes is impressed.
Behind the joke.
An expected value is an average across possible outcomes, not a promise. Elena's chart shows the spread: a 5th percentile of −$1.0M, an expected $2.0M and a 95th percentile of $6.0M. The executive prefers the single optimistic number, but a sound decision depends on whether the business can absorb the bad cases. Showing the tail risk up front is what makes the forecast trustworthy.
The transcript.
For readers who prefer dialogue without zooming in.
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Executive: The forecast says we'll make two million dollars.
Elena Reyes: That's the average outcome.
Elena Reyes: Here's what happens when things don't go according to plan.
Dr. Bayes: You're presenting the downside voluntarily?
Elena Reyes: I'd rather discuss it here than explain it to the board six months from now.
Executive: But it's less optimistic!
Dr. Bayes: Precisely. Keep her forecast.