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

We here need to give an example of a game in which we are to calculate the expected payoff value. An example here is given as:

Let there be a game such that you pick a card from a pack of 52 cards. For every pick, the person has to pay $3.

If we get an ace, the payoff is $30.

Now, as the probability of getting an ace is given as: 4/52 = 1/13

Therefore the expected payoff here is computed as:

E(payoff) = 30*(1/13) + 0*(12/13) = 30/13

As we also paid $3 as the entry fee, therefore the expected complete payoff here is computed as:

= 30/13 - 3

= -9/13

Therefore -9/13 is the required payoff here.