Consider a game in which a coin will be flipped three times. For each heads you will be paid $100. Assume that the coin comes up heads with probability 1/3.

Consider a game in which a coin will be flipped three times. For each heads you will be paid $100. Assume that the coin comes up heads with probability 1/3. a. Construct a table of the possibilities and probabilities in this game. Possibilities Outcome Probability 8 / 27 1 2 4 / 27 0 heads, 3 tails 1 heads, 2 tails 2 heads, 1 tails 3 heads, o tails 3 / 4 11 / 27 Instructions: Enter your responses rounded to the nearest whole dollar. b. Compute the expected value of the game. The expected value of the game is $ c. How much would you be willing to pay to play this game? A person who is risk averse will want to pay less than $ ; a person who is risk-neutral will be willing to pay $ d. Consider the effect of a change in the game so that if tails comes up two times in a row, you get nothing. How would your answers to the first three parts of this question change? d. Consider the effect of a change in the game so that if tails comes up two times in a row, you get nothing. How would your answers to the first three parts of this question change? Possibilities Outcome Probability / Payoff $ 1 2 / $ 3 / 3 tails, 0 heads tails, heads, tails tails, tails, heads heads, tails, tails 2 heads, 1 tails $ 4 $ 5 / $ 6 / 3 heads, 0 tails $ Expected value = $ A person who is risk-averse will want to pay less than $ ; a person who is risk-neutral will be willing to pay $