Question

When playing roulette at a​ casino, a gambler is trying to decide whether to bet

​$10

on the number

15

or to bet

​$10

that the outcome is any one of the

three

possibilities

00 comma 0 comma or 100, 0, or 1.

The gambler knows that the expected value of the

​$1010

bet for a single number is

−$1.06.

For the

​$10

bet that the outcome is

00 .0 or , or 1​,

there is a probability of

Fraction3/38

of making a net profit of

​$40

and a

35/38

b. Which bet is​ better: a

​$10

bet on the number

15

or a

​$1010

bet that the outcome is any one of the numbers

00 comma 0 comma or 100, 0, or 1​?

​Why?

​

Answer 1

We can see that the expected value of $10 bet on number 15 is higher (of lower negative value), that the expected value for the​$10 bet that the outcome is 00,0, or 1. We chose the bet with higher payoff (or lower loss)

ans:

a ​$10 bet on the number 15 is better as it has a higher expected value (or has a lower expected loss)

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