You have been invited to play a coin-flipping game. The coin is flipped until he

Question

You have been invited to play a coin-flipping game. The coin is flipped until heads appears for the first time. The payoff is P(n)=2^n where n is the number of tails. For example, if heads is the result of the first flip, n=0 and P(n) = $1. The table shows the results for the first four potential flip sequences. How much would you be willing to pay to play this game.

Flip Sequence                             N                                                     P(n)

H                                                    0                                                      $1

T,H                                                 1                                                     $2

T,T,H                                             2                                                      $4

T,T,T,H                                          3                                                      $8

Explanation / Answer

50 cents. To obtain the feeling of betting by usuing coins.

Related Questions

Navigate

• Browse (All)
• Browse Y
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.