My nerd level experience with probability and statistics, in baseball and sports writing, in my university grant finance work, in my past experiences with poker research, etc… taught me the value of concepts like utility and expected value.
Utility is essentially the relative value of a possible action. You can measure the utility of printing and handing out fliers by how many extra people it can get to attend your show… minus the cost of producing those fliers.
Expected value is an estimated numerical value placed on a given decision or outcome.
A dumb but simple and illustrative example:
You have the option of buying an apple from a wholesaler, and reselling it at the farmer’s market.
One choice is to do nothing. The expected value of doing nothing is $0.00.
One choice is to buy the apple wholesale for, say, 50 cents, and re-sell it. If you sell the apple for 75 cents, the expected value of your effort is $0.25: the 75 cents you made on the sale, minus the 50 cents you paid to buy it. Relatively speaking, it’s worth more expected value in this case to buy and resell the apple than to do nothing.
If you can only sell the apple for 35 cents, then your expected value is a loss of $0.15. There is more expected value in doing nothing ($0.00) then in making the effort to buy and resell the apple (-$0.15), so your best decision in this case is not to bother.
This is just a simplistic example. There are of course other variables, such as the effort expended to buy and re-sell the apple, that it might not be worth your time to sell that apple for a measly quarter in value.
Plus, it’s possible you won’t always sell the apple as expected. You may buy the apple and attempt to sell it, but there may be no buyers, or maybe your dumb ass gets hungry and eats it before you can sell it. Either way your expected value of that case is -$0.50, the cost of the apple.
So when figuring expected value you also have to consider the probability of all potential outcomes:
Let’s say the market is bustling and your chance of selling the apple for 75 cents is pretty good… say, about 80%. Thus, 80% of the time you will net a profit of $0.25… and 20% of the time you will not sell that apple and will net a loss of $0.50.
Using a methodology called a Markov chain, we can determine the net expected value by multiplying the value of each possible outcome by the probability of that outcome happening to get a net total expected value (NetEV).
($0.25 x 80%) + (-$0.50 x 20%) = NetEV
($0.20) + (-$0.10) = NetEV
($0.10) = NetEV
So, with an 80% chance of success on a 75c apple sale, the net expected value of trying to sell the apple is $0.10. You can expect more value from trying to sell the apple (even given the chance of failure and loss) than to do nothing. So, even with the risk of failure in this scenario, there is more value in trying than not trying.
Or let’s say the market is kind of slow, and your chance of selling the apple for 75 cents is 25%.
($0.25 x 25%) + (-$0.50 x 75%) = NetEV
($0.06) + (-$.38) = NetEV
(-$0.32) = NetEV
Trying to sell the apple then is an obvious bad decision. You will not turn a profit often enough to offset the times when you post a loss by not selling.
What in the sky blue fuck does this have to do with fringe festivals?
For myself, until recently, nothing outside of a vague concept to consider. Like anyone who did so, I considered the possibility of paying $300-1000 to enter a festival only to not make that money back. But aside from estimating the needed ticket sales, I didn’t give it more thought than that.
But recently I realized there may be (and probably is) a statistical baseline I can find that tells me when it’s worth my while to enter a festival.
During my time practicing and researching poker years back, I found there was a baseline expected value where it was worthwhile to play a hand in a situation. That hand’s value even changed based on the scenario. If you played a hand in a situation with a negative expected value, you may win or lose big in a given situation… but making that decision would lose money in the long run. Likewise, any hand or situation with a positive expected value may win or lose in the moment but in the long run would be a winning decision.
Let’s jerk the steering wheel on this bus again: I am a fantasy baseball nerd. I get various player projections and analyze the shit out of how much a given player may produce in a fantasy stat category over other players. I find there is a certain baseline where having a given player on your fantasy team hurts your team more than he helps. And that baseline can change depending on all sorts of factors. Maybe he steals a lot of bases, but he’s a terrible hitter. Maybe a pitcher gets a ton of strikeouts, but he walks a ton of guys and drives up your team ERA and WHIP. You have to decide whether the value those players add is worth more than the detriment they do to your other categories.
GIVEN ALL THIS, there has to be a zero baseline where entering a fringe festival is worth your while when the potential expected value is positive, and not worth it when the expected value is negative.
“But Steven!” your idealistic self is asking, “Isn’t participation in a fringe festival about sharing your art and about the experiences of participating rather than making any money?”
I say, in general, yes, absolutely. Just about any festival experience is an opportunity to share and grow and you can learn so much from that. And if this shit didn’t cost a ton of money and time, I would leave it at that.
Obviously, I didn’t.
TO BE CONTINUED IN PART 3.
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