anonymous
  • anonymous
MEDAL!! (bill and larry toss two coins. if both coins come up heads, bill pays larry $4. larry pays bill $1 otherwise.) What is the expected value of this game for bill?
Mathematics
katieb
  • katieb
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anonymous
  • anonymous
There are four possibilities, each with a probability 0.5*0.5=.25 = 25% HH = Bill pays Larry $6 HT = Larry pays Bill $1 TH = Larry pays Bill $1 TT = Larry pays Bill $1 Bill will have a positive expected payoff and Larry will have a negative expected payoff, but the value will be the same: Bill's Payoff = -6*.25 + 1*.25 + 1*.25 + 1*.25 = -$0.75 Larry's Payoff = 6*.25 + -1*.25 + -1*.25 + -1*.25 = $0.75

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