In a game of chance, I bet x dollars. With probability p, I win y dollars....

Question

Question

In a game of chance, I bet x dollars.

With probability p, I win y dollars. What should

x be for this to be a fair game?

Answer 1

Answer #1

For this to be a fair game, the expected value of the whole game should be equal to 0.

Therefore, we have here:

Bet amount = Expected profit from the lottery

x = p*y

Therefore x = py for the game to be fair.

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Answer 2

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