In order to generate interest in their casino, the Sands Casino Resort developed

Question

In order to generate interest in their casino, the Sands Casino Resort developed a new slot machine. The game is free to play and contains one glass window with a rolling series of three pictures that spin when a handle is pulled. After 5-10 seconds the roller stops and one picture is revealed. There is a 1/3 chance that the game will stop on any one of the three pictures. If the player ends up with picture #1 she wins $600. If the player ends up with picture #2 she wins $300, but if the player ends up with picture #3, she must pay the casino $900. Which types of individuals (based on risk preferences) will play this game?

Explanation / Answer

here as expected value of game =(1/3)*600+(1/3)*300-(1/3)*900 =0

as expected value of game is 0; this is risk neutral preference

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