Simple expected value calculations are at the heart of Kahneman and Tversky's prospect theory. Calculate the expected value of the following gamble. You are
Simple expected value calculations are at the heart of Kahneman and Tversky's prospect theory. Calculate the expected value of the following gamble. You are playing the following game: draw a card out of a 52-card deck that has 26 red cards and 26 black cards. Assume that you are equally likely to draw either color. Your bet is such that if you draw a black card, then you win $18; if you draw a red card, then you lose $13. What is the expected value of your bet, i.e., the expected payoff from one round of play? Round your answer to the nearest penny. Do not enter the $ symbol in your answer. If the expected value is negative, then include a minus sign. Next
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