Mathematics for Liberal Arts
posted by Sandra .
You are on a TV show. You have been asked to either play a dice game five times or accept a $50 bill. The dice game works like this:
If you roll a 1, 2 or 3, you win $46.
If you roll a 4 or 5, you lose $22.
If you roll a 6, you lose $85.
Should you play the game? Use expected values and decision theory to justify your answer. (Round the answer to the nearest cent.)
The expected winning per game is
(1/2)*46 - (1/3)*22 - (1/6)*85
If that is positive, play the game
Take the $50 and quit.
(Each game as outlined by drwls has an expected value of $1.50.
You are playing it 5 times, so the expected return is $7.50.
Your choice was to either accept $50 or play the game)
Reiny is correct. I assumed you were betting your own money. I didn't read all the question.