Question

Make a probability distribution function table for the game where x is the event, Payoff(x) is the amount won/lost if event x occurs, and P(x) is the probability that event x occurs. The expected payoff (i.e., the amount you would win/lose on average per play after playing the game many times) is E. Find E for the game you chose.

There are 16 cards placed face down on a table. On the face side, there are various prizes/losses written. One card has a first prize of $4000. Another card has a second prize of $1500. Two cards have a third prize of $1000. The remaining 12 cards have a loss of $200, meaning you have to pay out $200. You are forced to pay $20 to play the game. Then you are given a choice of either picking one of the cards, or taking $300 in cash. Calculate the expected payoff of the game. Then decide mathematically, not emotionally, whether you should play the game or take the $300 and run!

x	Payoff(x)	P(x)	Payoff(x) *P(x)
1st prize
2nd prize
3rd prize
loss
			E =

Answer 1