Mark has a choice to play a game and pay $80 with a probability of 40%...
Mark has a choice to play a game and pay $80 with a probability of 40% to win $250. Should he play or not? Support your answer by constructing a decision tree with EMV calculations for decision options.
Homework Answers
P(Win) = 0.40
If Mark wins, he earns = 250 - 80 = 170
P(Loss) = 1 - P(Win) = 0.60
If Mark losses, he earns = $ -80
EMV = 0.40*170 + (-80)*0.60 = 68 -48
EMV = $ 20
Since EMV is positive so Mark should play the game
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