Here\'s my dilemma, I can accept a $1500 bill or play a game ten times. For each
ID: 3303990 • Letter: H
Question
Here's my dilemma, I can accept a $1500 bill or play a game ten times. For each roll of the single die, I win $500 for rolling 1 or 2; I win $100 for rolling 3; and I lose $300 for rolling 4, 5, or 6. Based on the expected value, I should accept the $1500?
1.The statement makes sense makes sense because the expected value after ten rolls isnothing dollars, which is less than the value of the current bill.
2. The statement does not make sense because the expected value after ten rolls is nothing dollars, which is greater than the value of the current bill.
Explanation / Answer
The expected value of each game can be computed as:
= [ Profit after getting 1 or 2 * Probability of getting a 1 or 2 ] + [ Profit after getting 3 * Probability of getting a 3 ] + [ Profit after getting 4 or 5 or 6 * Probability of getting a 4 or 5 or 6 ]
= 500*(2/6) + 100*(1/6) - 300*(3/6)
= 33.3333
Therefore for 10 such games, the expected winnings would be computed as:
= 10* Expected profit from each game
= 333.33
Therefore, This statement makes sense as the expected value after ten rolls is $333.33 which is less than the value of the current bill of $1500