If you were asked to choose between a sure ($ 10,000), or an (80 %) chance of

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If you were asked to choose between a sure $\$ 10,000$, or an $80 \%$ chance of winning $\$ 15,000$ and a $20 \%$ chance of winning nothing, which would you take?

Game A:

\[E=\$ 10,000(1)=\$ 10,000\]

This is a sure thing.

Game B:

\[E=\$ 15,000(0.8)+\$ 0(0.2)=\$ 12,000\]

True or false? The better choice, according to expected value, is to take the $80 \%$ chance of winning $\$ 15,000$. Explain.

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Nature Of Mathematics

ISBN: 9781133947257

13th Edition

Authors: Karl J. Smith

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Question Posted: Jan 31, 2024 03:02 AM

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If you were asked to choose between a sure ($ 10,000), or an (80 %) chance of

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Nature Of Mathematics

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