On most SAT questions, there are 5 answers of which exactly one is correct and exactly four are wrong. If one answers correctly you get $1$ point. If you answer incorrectly, you receive $-\frac14$ points. If you answer no options, you receive $0$ points. You may not answer multiple questions.
It is said by the SAT test creators that leaving an answer blank is better than blind guessing, and I blindly believed them. I then thought, are they actually correct!
You see, the way I see, there is one answer for which you receive $1$ point and 4 answers for which you recieve $-\frac14$ points. Therefore in the long run, you would get $0$ on blind guesses, which is the same as the $0$ you get for not answering. Therefore guessing (blind or otherwise) is at least as good as leaving it blank in the long run no matter how much you know about the question.
Is this reasoning correct? I can't see a flaw in my reasoning, but its my argument against the authority of the SAT people. It seems more likely that my reasoning is a flaw, but I can not find it.
Note: Although this is not strictly necessary, but if my reasoning is correct, it would be good to cite reputable sources to build up a case to convince my school so they could inform students (people outside mathematics listen to authority, not reason.)
If points are awarded as you say, then indeed the expected points you can gain from choosing one of the five answers randomly is $$Ep=1/5*1-4/5*1/4=4/20-4/20=0.$$ However, you are missing the fact that this happens only in expectation, so it is not the case that
You can put it another way: in 4 out of 5 cases guessing is worse than leaving it blank. Though fair enough, in 1 out of 5 you are better off.
Another point: people are usually risk averse, that is, would rather have 0 for sure than 0 in expectation, because the latter implies you sometimes get a negative score. But this is a matter of your preferences: if you are generally a gambler, then you might as well guess and gamble that you got the right answer.
Finally, as noted in the comments, as soon as you can reasonably rule out some options or can at least order the answers with respect to likelihood of being correct, then you should guess (but not blindly, i.e., pick the answer you think is most likely).