You are a contestant on a television game show and you have won $5000 so far You are now offered a choice: either you can keep the money and leave or you can continue into the next round, where you have a 70% chance of increasing your winnings to $10000 and a 30% chance of losing the $5000 and finishing the game with nothing. 

(a) Which option would you choose? 

(b) How does your choice compare with that which would be prescribed by the expected monetary value criterion?

Answer rating: 100% (QA)

Required solution If you leave the game then you have guaranteed 500... View the full answer