Please explain part a and b! 1) You are invited to a poker game in which 10 peop
ID: 3047418 • Letter: P
Question
Please explain part a and b!
1) You are invited to a poker game in which 10 people play. $80 goes to the winner, $50 goes to second place, and $30 goes to third. You feel that you are a better player than average and that if you play, you have a 25% chance of winning, 25% chance of coming in second, and a 25% chance of coming in third.
a)What would be your expected winnings if you entered the tournament?
b)Now assume you are required to pay a $30 entrance fee. Should you enter the tournament? Why?
Explanation / Answer
a) Expected winnings = 0.25*80+0.25*30+0.25*50+0=50
b) Since expected winnings of 40 >30, we should enter the tournament.