Question

Imagine yourself at a fair playing one of the midway games. Pick a game and calculate the expected value and post your results along with how you calculated them. For example, you may decide to throw a basketball to try to win a $10 bear. You paid $2.00 for three shots. What is the expected value? (Please do not use this example in your answer).

Answer 1

Solution:

Consider the game given below.

The guessing game: There are 3 white balls and red balls. Each ball is hidden under identical hats, in a random manner. The player must guess in which the red ball is kept. If the player guesses right, he/she will win a unicorn worth $5

The cost of playing the game is $2

Expected value = Prize value x P(winning) - Cost of game

= 5 x (1/4) - 2

= 1.25 - 2

= $ -0.75

(P.S: Negative sign indicates loss)